When I saw the news theaters will begin to open on a wider basis, it got me thinking restaurants. Yes, movies are great. Honestly, going to the movies is one of the things I miss most. It sits second to getting out of the house to eat. I'm talking about indoor activities that are more routine. Attending a sporting event or a concert are fantastic as always (unless your team loses) and outdoor activities have remained something accessible for most, but just getting away from the desk to spend an hour relaxing and dining is something that helped me destress.
I don't anticipate we'll see the sit-down flourish as quickly as fast-casual dining. Today, we're seeing a breakout higher in shares of OPES Acquisition Corp. (OPES) . I know that doesn't sound casual dining, but this group is combining with BurgerFi International picking up 125 locations across 23 states. That should approach 140 to 150 before the year-end, but the impact of Covid-19 obviously could slow or delay growth.
With a more aggressive use of technology, BurgerFi is able to capitalize on the increased desire for delivery plus digital ordering kiosks can limit in-restaurant contact. That may appeal to even the more hesitant diners concerned about the potential dangers that remain outside their front door, but those who also want a premium burger. The company will be stepping into the public market with over $40 million in net cash along with strong revenue growth in the mid 30% range and EBITDA growth closer to 80%.
Checking out the chart, Thursday's break above resistance looks like the real deal. The stock has formed a rounding bottom with a lower highs and higher lows wedge forming since the start of August. We're now on the path to test the 50-day simple moving average (SMA) around $13. With the Full Stochastics indicator pushing above the midline and the 8-day SMA set to break above the 21-day SMA, I believe a gap fill to $14 here is doable.
OPES does not yet have options, but I'm content buying the stock. I actually prefer the stock over the warrants here as well. Support now sits at $11.75 and $11.00. That presents a setup where I see the reward outweighing the risk both in probability and nominal value. I view this as a split approach picking up shares to trade as well as buy and hold. My approach would be to use a half and half ratio, but investors and traders need to adjust to their own risk profile.
