This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

These Stocks Plunged 10% in a Day. Is Chipotle Next?

Wednesday's horror show also included a 10% correction of bellwether gold stock Goldcorp (GG - Get Report). No one saw this coming, and the stock closed at $33.17, down almost 10% from Tuesday's closing price.

Again the culprit was unexpected bad news. The Canadian mining company lowered its 2012 production guidance because of operational problems at two mines.

The Vancouver, B.C., based precious metals producer cut its full-year gold production forecast Tuesday to a range between 2.35 million ounces and 2.45 million ounces. That compared with its previous 2012 forecast of 2.6 million ounces. Goldcorp also predicted it would produce between 30 million and 31 million ounces of silver in 2012, compared with its previous guidance of 34 million ounces. Its copper forecast was unchanged at 110 million pounds.

GG also attributed the changes to an inadequate water supply that limited plant operations in June at their Penasquito mine near Mazapil in north-central Mexico. The problem will impact the mine throughout the second half of the year.

Here's the one-year chart for GG showing how close it is to its 52-week low. GG Chart GG data by YCharts

Perhaps the biggest loser Wednesday was HHGregg (HGG - Get Report). The appliance and electronics retailer cut its full-year forecast and posted first-quarter guidance well below Wall Street expectations. The stock plummeted 36% on heavy volume.

So enough horror stories for one article. How about a buoyant stock like Chipotle Mexican Grill (CMG - Get Report)?

CMG has been a highflyer among restaurant and fast-food stocks for some time. The five-year chart below shows its price trajectory compared to its price-to-sales ratio. CMG Price / Sales Ratio Chart CMG Price / Sales Ratio data by YCharts

For those of you who own CMG, which is well off its 52-week high of $442, I'm yelling "watch out below," because it still looks ridiculously overpriced.

Why would anyone want to own a stock that is selling at a price-earnings-to-growth ratio of almost 2, based on five-year expectations, and is also selling for five times its sales?

Granted they make wonderful Mexican fare, but CMG is trading at a trailing price-to-earnings ratio of 52, and a jaw-dropping forward P/E of over 34.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CMG $659.45 -0.98%
CMI $137.16 0.29%
GG $18.55 -2.20%
HGG $6.16 -3.30%
AAPL $124.26 0.71%

Markets

DOW 17,689.67 -28.87 -0.16%
S&P 500 2,057.04 -4.01 -0.19%
NASDAQ 4,863.61 -12.9090 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs