| Could you imagine paying more than a billion dollars for a "noodle shop?" That sounds crazy to me... Now, don't get me wrong, Noodles & Co. (NASDAQ: NDLS) is without a doubt an entrepreneurial success story. Since it was founded in 1995, the company has grown like a weed. There are now 343 locations serving a diverse menu of noodle dishes that range from Penne Rosa to Pad Thai. While that growth may sound exciting... and sound familiar to similar success stories like Starbucks and Chipotle...I'm going to show you why I'm deeply concerned. In fact, there is little remarkable about Noodles & Co., other than the company's recent IPO on the Nasdaq in late June. The IPO was priced at $18 and raised $96 million. The $500 million valuation of Noodles & Co. at the time of its IPO was healthy, to say the least. But after soaring to $43 in less than three weeks, the company's value has soared to $1.2 billion. The stock is now the third best-performing IPO of 2013, making Noodles & Co. the latest growth stock sensation. So why are investors gobbling up shares of this company? The simple reason is that it has a great story. It's the "growth stock story" of Noodles & Co. that has investors lining up to buy the stock. And the company's rapid growth and IPO performance have led to frequent comparisons to burrito company Chipotle (NYSE: CMG). Those have been particularly easy to make, since Noodles & Co. is led by Kevin Reddy – the former COO at Chipotle. His seven-year track record at Chipotle was impressive – growing the chain from 13 locations to 420. And it's the performance of Chipotle during Reddy's tenure that has investors salivating over Noodles & Co. That's a result of Chipotle's stock performance - shares went public in 2006 at $22, closed their first day at $44, and now trade at $382. Now don't get me wrong, Chipotle is an amazing company and growth story (and I personally love the place). But Chipotle's success isn't a reason to buy Noodles & Co – even if it is led by a former Chipotle exec. I want to go on the record saying that Noodles & Co. is no Chipotle. -------Advertisement------
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