Chipotle Mexican Grill (CMG) On Momo Momentum Watch Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Chipotle Mexican Grill ( CMG) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Chipotle Mexican Grill as such a stock due to the following factors:

  • CMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $254.2 million.
  • CMG has a PE ratio of 56.7.
  • CMG is currently in the upper 30% of its 1-year range.
  • CMG is in the upper 25% of its 20-day range.
  • CMG is in the upper 35% of its 5-day range.
  • CMG is currently trading above yesterday's high.
  • CMG has experienced a gap between today's open and yesterday's close of 1.1%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on CMG:

Chipotle Mexican Grill, Inc. develops and operates fast casual and fresh Mexican food restaurants. Its restaurants primarily offer burritos, tacos, burrito bowls, and salads. As of October 15, 2013, the company operated approximately 1,500 restaurants. Chipotle Mexican Grill, Inc. CMG has a PE ratio of 56.7. Currently there are 10 analysts that rate Chipotle Mexican Grill a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Chipotle Mexican Grill has been 485,300 shares per day over the past 30 days. Chipotle Mexican Grill has a market cap of $18.4 billion and is part of the services sector and leisure industry. The stock has a beta of 0.79 and a short float of 5.5% with 3.02 days to cover. Shares are up 11.3% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Chipotle Mexican Grill as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 20.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 29.74% and other important driving factors, this stock has surged by 79.75% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 29.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHIPOTLE MEXICAN GRILL INC increased its bottom line by earning $10.46 versus $8.75 in the prior year. This year, the market expects an improvement in earnings ($13.00 versus $10.46).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 29.8% when compared to the same quarter one year prior, rising from $61.35 million to $79.62 million.
  • Net operating cash flow has increased to $140.07 million or 11.13% when compared to the same quarter last year. In addition, CHIPOTLE MEXICAN GRILL INC has also vastly surpassed the industry average cash flow growth rate of -51.95%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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