Today's Unusual Social Activity Stock: Chipotle Mexican Grill (CMG)

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 an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Chipotle Mexican Grill as such a stock due to the following factors:

  • CMG has 11x the normal benchmarked social activity for this time of the day compared to its average of 12.97 mentions/day.
  • CMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $217.9 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on CMG:

Chipotle Mexican Grill, Inc., together with its subsidiaries, develops and operates fast-casual and fresh Mexican food restaurants. As of July 21, 2014, it operated approximately 1,600 restaurants; and 7 ShopHouse Southeast Asian Kitchen restaurants. CMG has a PE ratio of 52.4. Currently there are 11 analysts that rate Chipotle Mexican Grill a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Chipotle Mexican Grill has been 423,500 shares per day over the past 30 days. Chipotle Mexican Grill has a market cap of $20.9 billion and is part of the services sector and leisure industry. The stock has a beta of 0.94 and a short float of 4.7% with 3.89 days to cover. Shares are up 26.3% year-to-date as of the close of trading on Wednesday.

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, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 31.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CHIPOTLE MEXICAN GRILL INC reported significant earnings per share improvement 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 ($14.05 versus $10.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 56.9% when compared to the same quarter one year prior, rising from $83.38 million to $130.80 million.
  • Net operating cash flow has significantly increased by 56.51% to $189.33 million 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 -18.16%.
  • Powered by its strong earnings growth of 56.01% and other important driving factors, this stock has surged by 26.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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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