Trade Ideas – Chipotle Mexican Grill (CMG)
November 29, 2014 MarcoTrade
Expensive stocks are not necessarily those with a high nominal value, rather those of companies that are valued too high compared to what their earnings growth rate is. Chipotle Mexican Grill is a great example of a stock that scares away most small investors because of its high nominal value. As of Friday 11/28 close, CMG is trading at $663.62. The company is valued at roughly $20 billions with a forward PE of 51.7 which is somewhat high but justified by the excellent growth rate of this company. Last quarter EPS growth was 56%. To sum up, CMG is a growth stock wich presents higher risks and also higher possible rewards. Currently Chipotle is working on a consolidation started in July 2014 following a post earnings release breakout. The stock reached an high of $697.93 on August 21st and an intermediate low within the consolidation of $607.55 on October 21st.
Looking at CMG chart, there is a clear buying opportunity at the $675 level. The next earnings release is due at the end of January 2015 and I believe CMG moves higher from here.
Categories: Trading Ideas
- Loading stock data...