This article is part of our Real-Money Stock Picks series.
On Wednesday, something spurred panic at the burrito bistro, and that alarm spread through other chains on restaurant row as well. After an analyst comment about slowing same-store sales growth at Chipotle (Nasdaq: CMG), the company's shares plunged for two days running. It's kind of like somebody yelled, "Fire!" in a crowded theater, but investors who scrambled wildly to get out will probably get burned over the long haul.
Investment Technology Group released comments that spooked investors more than a rash of food poisoning, saying "Chipotle's same store sales comparisons appear to be decelerating sequentially" and predicting that second-quarter comps only grew 7.5% versus the consensus analyst estimate for 10% comps growth in the quarter.
Here are a few striking factors to consider. First off, anybody who follows the restaurant industry knows that a 7.5% increase in quarterly same-store sales isn't exactly a pathetic same-store sales figure, even if it indicates some sequential slowdown from Chipotle's past growth.
Secondly, the Chipotle news apparently rendered other restaurant companies' shares unpalatable to investors as well. For example, Panera (Nasdaq: PNRA) and Starbucks (Nasdaq: SBUX) also weakened considerably and were supposedly following on Chipotle's lead. Even Dunkin' Brands (Nasdaq: DNKN) was pulled along for the ride, even though it really doesn't seem to bear much resemblance to Chipotle. Numerous restaurant stocks still suffered on Thursday, too. (Granted, Thursday was a generally bearish day on the trading floor.)
These are the types of moments long-term investors wait patiently for: panicky selling and subsequent bargain prices. Chipotle's well off its 52-week high of $442.40, much like McDonald's (NYSE: MCD) shares have recently retreated from their peak of $102.22.
If you've had a hankering for shares of eateries like these, it's a good time to go shopping. Having bought shares of Chipotle in April for the real-money stock portfolio I manage for Fool.com, all I can say is that I wish I'd waited just a tad longer for a cheaper price. (I've bought Starbucks for the portfolio, too.) And of course, I'm mulling the idea of buying more for the portfolio at this point, and wouldn't consider selling unless I felt that something was truly amiss for the long haul.
The lower shares of stellar companies get, the better a bargain for investors. If you're in for the long haul, don't let panic at the highest-quality bistros bother you. Chipotle is one of those companies that's built to last, and a better near-term price amid some short-term negative noise is nothing to panic about.
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