Investors Puzzling Over Chipotle Mexican Foods Future

McDonald's executives probably dream of Chipotle at night, and that could be one reason that Chipotle has been getting a lot of investor attention recently. With their stock (CMG) near a 52-week high according to Google Finance, it has taken a dip as investors react to McDonald's (MCD) disappointing numbers in same-store sales, but its own results have been positive. McDonald's divested a stake in Chipotle that it held through 2006, says Wikipedia. With Chipotle same-store (open over 13 months) growth in the low double digits this past quarter according to Reuters, even short-term investors are looking to make a good return on Chipotle stock this year, says Market Intelligence Center.

A Chipotle restaurant near the University of Denver may be a better indicator than any P/E analysis. Lines out the door even in mid-winter testify to the popularity of their food, prepared fresh with quality ingredients and eaten in a casual environment or easily on the run. Burritos are popular, and Chipotle makes them well. University of Denver students can usually afford the best, so just "follow the money" and Chipotle is cashing in. Prices are reasonable, though, so others in search of quality "Fresh Mex" food have been lining up at their approximately 670 other stores.

A Chipotle fan club has sprung up, which although not affiliated with the company according to their website, is in the spirit of Chipotle's offbeat advertising campaigns. The fan site allows visitors to enter the ingredients in their meal and see just how healthy it was, something still unlikely at a McDonald's fan site.

In addition to healthy meals for customers, Reuters notes that Chipotle also makes sure that the meat they use had healthy, vegetarian and antibiotic-free meals. Their upbeat and quirky advertising presents the case for healthy food and builds brand image as a "fast casual" alternative that's socially conscious and innovative.

Schaeffer Research today noted that on the International Stock Exchange Chipotle "puts" activity indicates a pessimistic outlook, as investors seem to believe that the company will be brought down by the price of ingredients that is affecting other "fast casual" type restaurants. It's possible, however, that Chipotle's unique requirements for meat will separate them from the crowd at least in that area.

With technical data "bearish" but company success undeniable, investors are searching for clues as to whether now is a good time to invest in Chipotle's success, while options traders consider betting on a short-term slide with the rest of their industry sector.

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