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Tech Stock Selloff Drove Market Down To End Holiday Week

The stock market closed lower on Friday after a selloff in tech companies. S&P 500 fell 1.1% to 5,971, while NASDAQ dropped 1.5% to 19,722.

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Here is the ten-year chart of Chipotle Mexican Grill (CMG) as of November 19, 2024, when the stock was at $59.

Chipotle Mexican Grill stock has been on a tear in the past two years as it has jumped from $30 to $60. However, the stock went too far too fast, and is now ripe for consolidation as profit growth simmers down. Along the way, the P/E went from 35 to 57, and has since come down to 44 (which is still too high).

Quarterly profit growth just slowed from 36% to 17% last quarter. That is not enough growth for a lofty 44 P/E, so David Sharek feels the stock will either go sideways or trend lower in the near-term.

Meanwhile, Smoked Brisket has been a hit for the company, while honey chicken is on the way. Management anticipated the brisket would remain available until the next quarter due to limited supply of responsibly raised beef. Additionally, Chipotle Mexican Grill tested honey chicken, a flavorful twist on their adobo chicken with Mexican spices and honey and is now ready for a future rollout.

CMG is part of the Growth Portfolio. As US store growth simmers down, the company has growth opportunity internationally, especially in Canada.

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