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CMG - Chipotle stock

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  • CMG - Chipotle stock

    This stock IPO'ed at about 42 in January 2006, peaked at 714! in January 2015, and is currently at about 660.

    To be sure, it is in frothy territory - a P/E of about 46 (although nice EPS of about 14). Forty six is a very high P/E for a restaurant stock!

    (Compare to P/E of say, about 27 for Starbucks, 32 for Wendy's and 23 for Yum Brands (KFC, Pizza Hut, Taco Bell)).

    CMG is part of the craze that is taking the country by storm - higher end "fast food" places that purport to give you a much more healthful meal at a price that is not too much higher than McDonald's.

    (Which, incidentally, McDonald's is in BIG trouble lately
    McDonald's CEO out as troubles mount - Fortune
    mostly because people of the New Millennium are apparently getting TIRED of eating that unhealthful crap.)

    Compare CMG to a new stock that just came out, Shake Shack (SHAK) that started as a hot dog cart 14 years ago but just became a $1.7 billion dollar behemoth. SHAK offers no antibiotic and no hormone burgers (but then, so does Carl's, Jr. now, with its "All Natural" burger that made waves with its "All" Nude Superbowl Commercial with Charlotte McKinney
    Carl’s Jr. debuts sexist Super Bowl 2015 commercial - The Washington Post
    )

    At current valuations, SHAK's 63 restaurants are valued at $26 million each (while at current stock prices McDonald's is at $2.5M for each of its 36,258 global outlets).

    Now, are stocks like SHAK or CMG valued excessively, or are they (like AMZN) stocks that should be valued not on their P/E and EPS but rather on earnings? Time will tell.

    Currently, I have traded CMG but I came very late to the party so I don't hold much of this stock.
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  • #2
    CMG crumbling in the 656 arena, but it should go back to 700 within months if not weeks.
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    • #3
      I am currently short on this stock with a pretty substantial position. It made its run back to 687. I ended up selling at around 675, and for a week or so now I have been short on the stock. I'm looking for tankage! If CMG keeps going down this coming week, I'll maintain my short.

      The DOW is about in the middle of its 17K to 18K to 17K cycle, so it could go either way right now, but most likely, the DOW will drop some more, and CMG with it, so I should be in continued good shape with this short.
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      • #4
        Covered the short while CMG was down this morning. It is up now. Oh well, not the tankage I was expecting today. DOW could be, at least today, in an upward cycle after the morning sell off.
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        • #5
          A buddy of mine from high school with whom I coordinate trading (we exchange communications throughout the trading day), often uses the expression "Never seen anything like it" when a stock keeps going up, or the market keeps rallying. Or he says "They'll take it at any price!" when people keep buy buy buying even after the stock has gone up a lot. Really, he misuses the expressions because after being involved with the stock market for so long we've seen it all, and not much surprises me anyway. Stocks can and do go up a lot after an analyst recommends them, presents a new, higher target price, or just because the stocks have been rallying and people want to keep buying on the momentum.

          But yesterday, something happened with CMG that surprised even me, and "Never seen anything like it" REALLY was appropriate.

          Now before you even consider what happened, take a look at this clip (parental discretion advised, lol) from "The Wolf of Wall Street," particularly the phrase, "Nobody, I don't care if you're Warren Buffet, or if you're Jimmy Buffet, nobody knows if a stock is going to go up, down, sideways, or in f'in circles - least of all stockbrokers."

          Now, some background. For some time now CMG has been floundering. The stock tumbled after it missed earnings on February 3, 2015, and tumbled 50 points overnight from 726 to 676, and has been dropping ever since, to a low of 648.

          On Thursday, April 9, 2015, CMG closed at 651.72

          Friday morning, April 10, 2015, at 5am PST I noticed that CMG was up 12 points in the pre-market (also known as the AH, or aftermarket).

          I checked all the news sources - nothing. I assumed it was a mistake. CMG doesn't even usually HAVE an AH - the market makers (mms) usually just enter some B.S. bid asks that are so far spread from the actual prices that it's just their way of saying that We're Closed for Lunch (or Breakfast, or Whatever).

          By 5:45am or so it was up 15 points. Someone on the CMG yhoo message boards posted that the stock must have had an upgrade. But I still couldn't find anything.

          At 7am EST a blurb came out in Seeking Alpha (an app tool I use for instantaneous news feeds related to the stocks I trade) about how the stock was up 4% on strong volume - something like 20 points - with no news at all, just on a "Feel Good feeling."

          And by the end of the day, closed up 31! at 683.02 and even went up a little more in the AH.

          Seriously, so sua sponte a gang of burrito fans woke up and decided to buy buy buy and Kept buying, rocketing a stock that had been down a lot for days now beyond belief? Now, That was something - I've never seen.
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          • #6
            CMG hating life lately, including today, post-earnings.
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