1 Growth Stock Down 78% to Buy Right Now

Core Viewpoint - Portillo's, despite a significant stock decline, shows strong business performance and growth potential, making it an attractive investment opportunity [1][2]. Company Overview - Portillo's originated as a local chain in Chicago, specializing in hot dogs and Italian beef sandwiches, and has a strong local following [3]. - The company was acquired by a private equity firm and went public in 2021, with plans for national expansion [4]. Growth Strategy - Portillo's is expanding its location count by over 10% annually, aiming to exceed 100 locations by the end of 2025, with a long-term goal of nearly 1,000 locations across the U.S. [4]. - The company is focusing on expanding into Sun Belt markets like Arizona, Texas, and Florida, where brand recognition is already established due to the migration of Chicagoans [5]. Financial Performance - Since going public, Portillo's revenue has increased by 43%, with management projecting 11% to 12% revenue growth for 2025 compared to 2024 [5]. - The average unit volume (AUV) for Portillo's is reported at $8.7 million in 2024, which is among the highest in the industry [10]. Comparable-Store Sales - Concerns have arisen regarding Portillo's comparable-store sales growth, which has seen declines in the first three quarters of 2024, with a slight positive growth of 0.4% in Q4 [6][7]. - Management anticipates flat to 2% growth in comparable-store sales for 2025, which is lower than competitors like Chipotle [7]. Long-Term Outlook - Despite current comparable-store sales challenges, the initial high traffic at new locations in new markets is expected to balance out over time, maintaining profitability [9][10]. - If Portillo's continues to grow its locations by 12% annually, it could reach approximately 132 locations and generate around $1.2 billion in revenue, leading to a projected net income of $120 million [13][14]. Investment Potential - The current market cap of Portillo's is approximately $888 million, with a forward price-to-earnings ratio of 7.4, indicating a potentially undervalued stock [14].