No. of Recommendations: 1
Cash rich CMG is growing like a weed. It may go higher, a lot higher, but I find it hard to pay this much for a restaurant stock.

The company does make its money by selling the best ingredients. That could be a risk if some bad lettuce gets into the mix. Perception is everything in a situation like this.

I look at the stock's value like this. CMG's annual operating margins and profit margins are less than MCD. CMG has yet to compete with a value menu (which, even after selling its food for a $1, MCD still has better margins). There is no dividend for CMG while MCD pays 3.3%.

I don't have a problem with MCD social position -- toys to children and all. If the economy was to take a turn for the worse, I think high-priced Mexican food might be a hard sell.

I have to admit a bias here. I worked in Taco Bell's general offices before there were 100 Taco Bells. Knew Glen Bell. While YUM Brands doesn't have the margins of MCD or CMG, it is Taco Bell that brings home the greenback for YUM in the US (and KFC that earns the big money in China). So, if I want Mexican restaurant exposure, I'd look to YUM first (and get concept diversification too) for a much smaller multiple.

I can remember deep recenssions in the past where cheap eats were the best restaurant stocks. Those days could return (although today's younger people seem to be content buying luxury food items in a recession). With the world situation like it is, buying ultra-high multiple stocks makes me uneasy.

I like CMG's food. I prefer Mel's Southwest Grill because of their Monday special -- $5.55 for a Homewrecker burrito, chips and a drink. CMG doesn't compete on price and I find the made-to-order burritos at Mel's to my liking (and getting to know the servers has its benefits too).

I wish all CMG shareholders and Alyce good luck with your investment. It is a great company with an excellent product. It's just too rich for my wallet and tastes.

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