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Author: newsreporter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 429  
Subject: Ascending Past True Value Date: 8/19/2012 6:44 PM
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http://seekingalpha.com/article/803801-chipotle-mexican-gril...

Investors like looking for a high-growth stock for their portfolio to generate quick income. These stocks can gain momentum and investor popularity quickly and ascend at a rate that might be unrealistic in comparison with their actual value. One stock in particular that is experiencing this situation is Chipotle Mexican Grill (CMG).

Chipotle has been growing at a steady and brisk rate ever since it went public in 2006. After reporting slowing sales numbers for Q2 and revenue of $690.9 million, a 20.9% increase, Chipotle's stock price has tumbled over 25% to under $300 from its 52-week high of $442.40 per share. The analysts' revenue expectations were $704.8 million, and despite Chipotle's revenue still increasing 20.9% from the previous year, and the company posting earnings that beat analyst expectations by 26 cents, share prices still plummeted. Slowing sales were attributed to a slowing economy, and as a result reduced consumer spending.

I believe this pullback might offer a terrific re-entry point for investors who have been eying Chipotle for a while. Chipotle's price had shot up too quickly, and despite being a terrific stock, its PE multiple was just under 44, compared with McDonald's (MCD) at 17, Yum Brand's (YUM) at 21, Panera Bread's (PNRA) at 30, and Buffalo Wild Wing's (BWLD) at 25. A PE multiple that high leaves very little room for error, and in this circumstance Chipotle was hit hard. Investors can buy Chipotle at these levels though and feel much safer with their investment because the company is no longer trading at such an outrageously high PE multiple compared with the rest of the sector, but still contains high growth ability.

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The company needed this slip up to bring its share price down to realistic levels, but the growth will still continue as America shows increasing interest in eating healthier. Chipotle has 1,316 restaurants and plans on opening 165 new locations this year. Its current price of $292 makes this company an attractive buy candidate in my opinion.
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