Joe Terranova Chipotle Mexican Grill CMG-N BUY Jun 24, 2024

The best fast-food restaurant. They were honest and smart enough to admit they raised their menu prices too high in California.

This has an immediate negative impact on CMG, and their PE remains elevated. The outgoing CEO was key to CMG's growth. No, he wouldn't rush to buy today's dip.

What bothers him is that the new Interim CEO should have been named the new CEO which would have made the transition smoother.

Shares are down 27% from the June 18 peak. It's an industry leader and market-share taker and the management team even without the CEO who just left for Starbucks. The Interim CEO has been there since 2017 and been involved with the integration with technology, the culture and through-put. He can maintain momentum. She also likes that they re-set numbers: same-store sales are forecast at 6% instead of 7% due to higher food costs which is still an amazing comp. Share buybacks remain solid. Earnings are growing 15-20%.

Chart's hugging the 200-day MA, which could be an opportunity from a technical perspective. Consumer backlash about reduced portions. Worried whether same-store sales are peaking at this stage. Underperforming S&P 500 since spring. Not cheap at 48x forward PE, projected growth rate is 22%, still a 2.1 PEG ratio.

In the space, he owns MCD and QSR.

They missed their same-store sales based on a very high bar. Some disappointment here because expenses were higher and will open fewer stores than announced. Hold. Fast food is a crowded space now. Where else can you go?

A new CEO was announced. CMG faces a challenge from Starbucks and Shake Shack. The CMG chart is sideways as capital moves out of here and into Starbucks.

He heard today that next year's growth rate won't be that high, and still shares went up today. The is doing a great job. Trading this is a sucker's game. Own it and buy more on weakness.

It reports Tuesday. Always buy on dips. Is a fine growth stock in restaurants. 

Sells at 38x PE, so this will be down on today's tariff news, but buy it after all the tariff news.