CMG - potential short - anyone watching

Discussion in 'Stocks' started by J-Law, Apr 15, 2012.

  1. J-Law


    Let me start by saying this stock printed a 52 week high on Friday.
    This forum maybe a tad premature. But, is anyone sizing up this one as a potential short if & when the S&P rolls over? Because as good as a company as they are, hard to make a strong case for another 100 pts to the upside in this one. My thoughts are also if not a short candidate now. A possibly good one in the future.

    Caveat emptor.... Stranger things have happened. But, I'm thinking not.

    Thoughts? Opinions?
  2. I'm already short (I'm long the 425/415 put spread). Aint working so far. If it doesn't happen the next five days (I think they've earnings this week) I'll give it another try next month. Obviously exploded the last four month but at the end of the day it's still just a Burrito Place,
  3. spd


    Im travelling for work right now so I haven't been watching this lately, but its one of my fav stocks to trade. When it moves your way, it can really move.
  4. J-Law


    Engine, there should always be a strong list of reasons for shorting such a strong stock.
    But, you sized it up. It's just a burrito place.A burrito place with a $14B market cap & trading at high multiples?
    I'm not short yet, but in the context of this bull run, $442 share price looking frothy.

    Also been nosing around the Thompson stats. 30,750,000 float all but 1.6% is owned by institutions. But that 1.6% is insiders and a lot of exercise activity & sales going on in that group. The CFO responsible for a good amount of the past month's activity.
    That not being the whole premise for a short, but just another piece of info. Curious to see their numbers this quarter. I even suspect that they could report well. Beige book positive #'s could lend to that. But, nothing lasts forever. Patience is the key with this one.

    No stock has to come crashing back to earth. But, this one is making for a good probability trade with a general market roll over.
  5. Stop trying to pick tops. You'll hang yourself if you do that. Go with the flow. CMG is on a serious uptrend.

    Yes it has a high P/E ratio, but earnings are expected to go up 25% this year and another 25% next year. If you try to pick a top and it goes up, you lose money. If it stays flat, you lose money. I would go long on this stock, watch it carefully, and go short when the trend changes. No point trying to pick a top. Many a trader has blown his account trying to do that.

  6. I agree with peilthetraveler. You might get lucky and time one of the 50 point dips, like the ones in 2011, but that's a low probability trade for such a strong stock.
    Wait for it to fall below the 40 week average, then fall below the last higher low - breaking the uptrend.
    After that, when it rallies and then pauses, sell it short. That way your shorting at a lower high in a downtrend, not at a higher high in an uptrend.
    Assuming any of that happens, it will probably be quite a while from now I should think.
    People like to eat Burritos! and Chipotle is a "classier" way to do it. A good business model, and they're expanding like crazy.
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  7. I've been there to eat a few time just a few months ago. This place is usually packed at lunch time. They have good Mexican food if you tell me. But the PE...eventually...has to come down to 30 for it to be more reasonable. Either earnings have to go up or/and stock price has to come down. If they're not paying div than they are still expanding atm and eventually they will get too aggressive and failed in new mediocre markets but that could take months if not years. I guess it's better to wait until earning reports....
  8. I'm told watching stocks go up, while waiting for PEs to go down, can lead to ulcers!

    Another fundamental to keep in mind is Debt.
    CMG's Dept is currently: 0.00%!!
  9. I avoid those slow-grinding uptrends as I think they are much more difficult to short than the parabolic moves. I'd much rather have something that went up like a rocket and then have a bunch of longs that are itchy on their "windfall profit protect" trigger finger.

    Man, what an uptrend since 09, though...
  10. I noticed that the daily chart show a triple or quadruple top around $340 in 2nd half of 2011. It's been churning up beyond that point since. Very strong uptrend if you tell me. But maybe it's starting to go parabolic a little bit now? If you can't short it, why not hitch the slow ride up by buying on small pull back?
    #10     Apr 16, 2012