Chipotle Heats Up, but Takes a Dive

Stocks rallied on strong GDP numbers and Facebook earnings. Meanwhile, in earnings news, Chipotle shares jumped after hours, but Amazon cooled off.

Jan 30, 2014 at 10:00PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

A day after the market slumped on the Fed's decision to take the second step in its stimulus taper, stocks rallied today on strong earnings and GDP numbers. The Dow Jones Industrial Average (DJINDICES:^DJI) finished up 110 points, or 0.7%, while the S&P 500 and Nasdaq jumped 1.1% and 1.7%, respectively, as a huge beat by Facebook sent social media stocks soaring. The Commerce Dept. released its first of three estimates on fourth-quarter GDP today, saying the nation's economy grew at an annual rate of 3.2%, better than estimates of 3%. That figure was down from 4.1% in the fourth quarter, but still better than the 1.9% rate for the year. Personal consumption expenditures seemed to drive the strong figure. In other economic reports of the day, initial unemployment claims remained elevated at 348,000, and pending home sales fell 8.7% in December, well below expectations; but the market seemed to overlook those reports.

After hours, Chipotle Mexican Grill (NYSE:CMG) shares were heating up, jumping 13% as the burrito roller delivered another stellar quarterly report. Revenue at the fast-casual star increased 20.7%, to $844.1 million, better than estimates at $826.3 million, as same-store sales improved an impressive 9.3%, which came primarily from an increase in traffic. Earnings per share grew 30%, to $2.53, in line with estimates. Restaurant operating margin improved 100 basis points, and CEO Steve Ells said the quarter "demonstrated our ability to focus on and run great restaurants," saying the restaurant teams "continued to delight our customers." For 2014, the company expects nearly 200 restaurant opening and comparable sales in the low-to-mid single digits, excluding any price increases. Shares hit a record high near $560 on the news as Chipotle's 9.3% comp clip was especially impressive during a holiday season where consumers were thought to be pinching pennies. After a quarter like this, Chipotle looks to be poised for another solid performance in 2014. (NASDAQ:AMZN), meanwhile, was headed in the opposite direction after hours, falling 4.6%, to counteract a 4.9% gain during the regular session. The online juggernaut saw sales increase 20%, to $25.6 billion, below the $26.06 billion analysts had expected. Earnings per share of $0.51 also missed the mark of $0.66, but that was still an improvement from $0.21 a year ago. The company's guidance was not any better as it said it expects sales growth of 13% to 24% for the current quarter, below the analyst consensus at 22.4%, and operating profit around breakeven. Wall Street had been eyeing an EPS of $0.54. Amazon is a unique company, and the mild sell-off indicates that investors seem unfazed by a report that would send many stocks down double digits. After all, this is a company that has proved time and again it's willing to sacrifice short-term profits for long-term market power. And while Amazon may never put up huge profit numbers, as long as sales continue to grow at a brisk pace, the stock is likely to move higher over time.

Growth stocks you can rely on
They said it couldn't be done. But David Gardner has proved them wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market, and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Jeremy Bowman owns shares of Chipotle Mexican Grill. The Motley Fool recommends, Chipotle Mexican Grill, and Facebook. The Motley Fool owns shares of, Chipotle Mexican Grill, and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information