The Buzz

All markets and investing news all the time

Stupid Stock Move of the Day! Chipotle down 6%?

June 27, 2012: 3:07 PM ET

My wife raves about Chipotle (CMG). I'm always seeing the 20-somethings in my office grabbing burrito bowls from there as well. I amazingly enough have never been to one despite loving Mexican food. But it seems like it's incredibly popular.

So I was very surprised to see that the stock was plunging Wednesday. It seems that a cautious analyst report is being cited as the reason.

Others seem to worry that the so-called smart money may finally be fleeing the stock. After all, shares are still up 16% year-to-date and have surged 30% in the past 12 months.

Chipotle has held up well even as other fast food chains such as former parent company McDonald's (MCD), Yum Brands (YUM) and Wendy's (WEN) have recently pulled back on growth fears.

I get why investors are nervous. Chipotle is still a very expensive stock, trading at nearly 45 times 2012 earnings forecasts. And just because I know people who like the food doesn't mean it is a screaming buy. Facebook (FB) has 900 million users. It's popular. How did that IPO turn out? Nonetheless, at least one restaurant analyst thinks investors may be underestimating the company's momentum.

That's a compelling chart. If Chipotle defies the skeptics when it reports its latest results, the stock could be muy caliente once again.

Posted in: ,
Join the Conversation
Fear & Greed
Sponsored by
About This Author
Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

To view my watchlist

Not a member yet?

Sign up now for a free account
Stupid Stock Move of the Day
#StupidStock Move of the Day! Yes, Urban Outfitters may be finally turnings things around. But $URBN up 17%? Seems a bit excessive, no?
Powered by VIP.