5-Star Stocks Poised to Pop: Chipotle Mexican Grill

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Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the Class B common shares of burrito specialist Chipotle Mexican Grill (NYSE: CMG) (NYSE: CMG-B) have earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Chipotle Mexican Grill's business, and see what CAPS investors are saying about the stock.

Chipotle facts

Headquarters (Founded)

Denver, Colo. (1993)

Market Cap

$1.85 billion

Industry

Restaurants

TTM Revenue

$1.22 billion

Management

Founder/CEO Steven Ells

CFO John Hartung

Return on Equity (average last three years)

11.3%

Competitors

Rubio's Restaurants (Nasdaq: RUBO)
Yum! Brands (NYSE: YUM)

CAPS members bullish on CMG-B also bullish on

Buffalo Wild Wings (Nasdaq: BWLD)
Middleby (Nasdaq: MIDD)

CAPS members bearish on CMG-B also bearish on

Research In Motion

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 232 of the 240 All-Star members who have rated Chipotle Mexican Grill -- or 97% -- believe the stock will outperform the S&P 500. These All-Star bulls include alexpaz and tenamaxtli, both of whom are ranked in the top 15% of our community.

In late July, alexpaz took a contrarian attitude toward Chipotle: "Have been watching this stock since its IPO patiently waiting for the stock to take a big drop...look at the earnings and the growth, it's time to get behind this stock."

In a pitch from April, tenamaxtli agrees with that bullish attitude, focusing on the rather unusual bargain that can be had in the B shares:

An expanding leader in the upscale version of Mexican fast food. They use high-quality ingredients and build the food the way you like it. These B- shares are a final spin-off from [McDonald's (NYSE: MCD)] and, at this writing, have two different features from the A- shares: they sport a lower price, and they have 10 times the voting power. No telling when the market will bring a bit more parity to the share prices. Follow the expansion of this company's restaurants (and try the food).

What do you think about Chipotle Mexican Grill, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. CAPS is 100% free, so why not get started now?

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Chipotle, Buffalo Wild Wings, and Middleby are Motley Fool Hidden Gems recommendations. Chipotle is also a Rule Breakers selection. The Fool owns shares of Buffalo Wild Wings. Try any of our Foolish newsletter services free for 30 days.

Foolish contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 16, 2008, at 5:21 PM, sb101cu wrote:

    First, I do not understand why would TMF allow contributors to post recommendations for which they do NOT own shares. " Foolish contributor Brian Pacampara owns no position in any of the companies mentioned. "

    Secondly there is a flaw in the logic.Of the total members the ratio of the outperformers to underperformers is 1823 : 237. It is not just the concept of ratio. In ADDITION to the ratio, the NUMBER of members is COMPARATIVELY more important than just the ratio. That is the concept behind the CAPS ranking.

    What do you fools say...

  • Report this Comment On September 16, 2008, at 8:06 PM, TMFGebinr wrote:

    Hi sb101cu,

    Thank you for reading and for your comments.

    Considering there are many hundreds of stocks about which we write or mention in our articles, it would not be fair to our writers to require that they own shares before they are allowed to write about a company.

    As you pointed out, though, we do require our writers to disclose any ownership interest, which lets readers judge whether or not the writer may be biased. However, to prevent the appearance of manipulation, if they do own shares, they cannot have traded in them during the 10 days prior to publication nor are they allowed to trade in them for 10 days following publication. For complete details of our disclosure policy, please visit the page found at the link above, just below the article.

    As for the CAPS rating (number of stars), the number of calls and time frames for those calls are accounted for in the rating. However, the calls of the All-Star members weigh more heavily than those of other participants. Thus, as the editor of this series of articles, it makes sense to me to have Brian point out the number of All-Stars rating the company and the number of outperforms / underperforms. More details of the star rating system can be found in the article linked on the words "five-star ranking" in the above article.

    Regards,

    Jim Mueller

    Financial editor, The Motley Fool

    (And for disclosure purposes, because I am commenting on this article, of the companies mentioned in the article, I own shares of Yum! Brands, but no others.)

  • Report this Comment On September 16, 2008, at 8:09 PM, TMFGebinr wrote:

    Oops, I didn't see it at first. I also own shares of B-wild.

    Jim

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11/20/2009 4:03 PM
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CHIPOTLE MEXICAN G… CAPS Rating: *****
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MIDD $46.19 Down -0.46 -0.99%
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RUBO $7.11 Up +0.21 +3.01%
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