Purchase Date: July 18th, 2017
Sell Date: Aug 22nd, 2018
Purchase Price: $374.98
Sell Price: $514.31
Gain: 37.2%
Current Price:[stock_ticker symbols="CMG" show="name" static="1" nolink="" speed="10" class=""]
Why We Sold Chipotle
Chipotle (NYSE: CMG) is an excellent company, and we’re excited for new CEO Brian Nicoll. With that said, we worry that Chipotle’s excitement has been priced in without an uptick in results. Furthermore, with China’s internet stocks being hammered in 2018, we believe there is more upside in that space.
Since we sold Chipotle, their stock price has been trending down. If Chipotle returned to a $10 billion valuation, we would entertain opening our position again.
Why We Like Chipotle
Chipotle (NYSE: CMG) has a market cap of only $10.64 billion – and the growth is nowhere near over, they have roughly 2.3k stores and plan to open an additional 200 in 2016. On top of adding stores, they’re investing heavily in digital sales and catering.
Their stock fell over 4% on the date of this article due to a norovirus incident in Virginia – this comes after 5 people in Washington state contracted E. coli after eating at Chipotle in July 2015, along with hundreds sickened in California by a norovirus, and finally 64 people in Minnesota being sickened by salmonella.
So what is different this time? Norovirus is incredibly different from E. coli or salmonella, anything could cause this. Furthermore, they spent a ton of money on improving food operations – which is reflected in how they responded to their most recent incident?
Chipotle has redefined fast casual and is focused on customer success. When you consider their $10.64 billion valuation, their room for organic growth in this space, along with new concepts to take a chunk out of the pizza and burger market – we’re convinced that this company has a ton of room for growth.