Stay Hungry for a Better Entry Point

Red Robin Gourmet Burgers (RRGB) has had an amazing run in 2013. The stock ran from $27.18 to $69.13 before pulling back in the past few days along with the market. RRGB closed Tuesday at $66.02. That leaves the shares trading at 29.2x trailing earnings per share (EPS) of $2.26.

Since its July 2002 IPO, Red Robin has only exceeded that valuation once before. Buyers at 2005's pinnacle paid almost $63 and an even higher 38x that year's profits. Owning the stock at that time proved to be a bad mistake. The shares gapped lower after the next quarterly report and continued to slide until bottoming at an astoundingly cheap $7.52 along with the broad market in late 2008. What was the price-to-earnings ratio (P/E) at that panic low point? Just 4.1x....228 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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