| Stock (Symbol) | Stock Price | |
Chipotle (CMG) |
$230 |
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| Data is as of | Expected to Report | Sector |
November 18, 2010 |
Feb 9 |
Retail & Restaurant |
| Sharek’s Take | ||
 Chipotle’s been on a breathtaking run in 2010, and with same store sales of 11% last quarter, the momentum should continue. CMG is so hot that the stock closed at $180 before reporting last quarter’s earnings, the stock then opened at $200 and here we are less than a month later and the stock is $230 — up from $85 a year ago. Now one might think its time for a fall — I don’t. Same store sales is a leading indicator for retail stores and restaurants. So earnings should be great this quarter too. Also, at 35 times earnings, CMG isn’t expensive. You can’t assume this stock is going to correct. |
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| One-Year Chart | ||
 A year ago the stock was around $85, whew and now its $230. The one-year chart shows no significant corrections — so yes technically this stock is due for a correction. But with profit growth of 41% next quarter and estimates of 28% this quarter, I think the stock could fall until the P/E got to 30, when buyers would likely show up. That’s $195, which is only 15% down from here. |
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| Earnings Table | ||
 Chipotle’s sales grew 23% last quarter, 20% two quarters ago and 16% three quarters ago. Momentum is actually getting stronger.
CMG beat by 24 cents last quarter. The 8 cent beat two quarters ago concerned be because CMG had beaten by greater then a dime every quarter since the fourth quarter of 2008. Wow — annual estimates flew higher. This is really good. 2010-2012 numbers jumped by around 50 cents a year. Quarterly estimates increased, with 28% and 23% profit growth expected the next two quarters. Of course CMG is on a string of beating the street, so 35% should be no problem for a little while. |
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| Fair Value | ||
 Chipotle keeps blowing through its fair values. With profit growth of 41% last quarter and maybe that amount during the next six months, 40 times earnings is my fair value. |
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| Ten-Year Chart | ||
 CMG’s sizzled before. In January 2008 the stock was around $150 and sold for 55 times 2008 estimates of $2.72. When CMG made only $2.36 the stock took a beating as the P/E came down. The clue to look for when looking for the top might be estimates declining. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
7 of 18 |
CMG is the 7th best stock in the 18 stock Growth Portfolio. Momentum continues as sale store sales of 11% indicate great profits are coming this quarter.
CMG should have been in the Aggresive Growth Portfolio but I made the mistake of selling it from this portfolio before the recent surge. Now with the stock as high as it is, I don’t want to buy now. |
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Aggressive Growth Portfolio
N/A |
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