I’ve heard the trite phrase, “The trend is your friend…”. Well, that works, until it doesn’t. Chipotle was sporting over a 35 P/E back when the stock price was at 700. The stock price is now around 425, and has a 30 P/E, because the earnings have precipitously dropped. Value investing looks at a decent multiple for a good business, and 30 is just ridiculous for a restaurant. Once it gets down to 15, it will be worth looking at, because I believe Chipotle will overcome. The bacteria breakouts will be a distant memory in a couple of years, so this is one to keep on the radar, and wait for a stock price in the 200s. While that will be 3 times book value, Chipotle has a following that should keep it afloat for decades to come.
Chipotle (CMG), which has fallen from darling status after an E. Coli and norovirus food-safety crisis last year, dropped after reporting first quarter earnings after the bell on Tuesday
Read Full Story: Chipotle sales nosedive, stock falls