Below is a brief note from Hedgeye CEO Keith McCullough explaining why we're adding Red Robin (RRGB) to Investing Ideas:
"I've spent my first few days in London reminding investors why being long both Tech and Consumer Discretionary is crushing everything "reflation" right now.
One sub-sector of the US economy I like (that has easy comparisons) is casual dining. And one of Restaurants analyst Howard Penney's favorite LONG ideas continues to be Red Robin (RRGB).
As Penney sees it, the key tenants of a LONG thesis are very much in place:
- The development strategy, under Chief Development Officer Les L. Lehner, is now very rational and focused on growing strategically and improving ROIIC.
- Operationally, there is significant low hanging fruit, and Carin Stutz is the right COO to instill the right operational mentality.
- Putting it all together, CFO, Guy Constant, laid out in his presentation the 5-year growth model, which seems very manageable.
Howard has been hotter than a firecracker lately so I'll send you this immediate-term TRADE oversold on RRGB today (it's at the low-end of its risk range on decelerating volume)."
