Chipotle Mexican Grill (CMG) is one stock that just seems to love to rise. Its year-to-date return for 2012 is more than 20%, outperforming the broader indexes once again. Since the news of its plan to open new restaurants in Europe came out, the stock has risen more than 5%.

Although the region holds plenty of potential, it is important not to be carried away with the excitement associated with the news. Chipotle competes mostly with quick-service and casual-dining restaurants such as Chili's, McDonald's (MCD), Burger King, Yum Brands (YUM) and Papa John's. We have a $393 price estimate for Chipotle, implying a discount of 5% to the current market price.

Chipotle Opens More Restaurants in U.K.

Chipotle opened its first restaurant in the U.K. in 2010 and the next in 2011. It recently announced that is ready to launch three new restaurants in the second quarter of 2012 in London. If successful, this could open the door to a whole new world of opportunities for the company. Chipotle has more than 1,200 restaurants in the U.S., and given its premium pricing, we do expect a slowdown in the rate at which new restaurants are opened in the U.S.

Europe opens a whole new market for the company. It is a big enough market with consumer income levels comparable to that in the U.S. Moreover, the company's tagline 'Food with Integrity' goes well with the European eating culture that emphasizes natural ingredients more as well as freshly prepared food. Fast food companies like McDonald's are often derided for serving inexpensive, mass-produced food. Another factor that may work in Chipotle's favor is that eating out is generally more expensive in Europe than in America and so the company can benefit from consumers paying more for their food.

Chipotle also plans to open its first restaurant in France in 2012. It has fancied entering Germany for some time, although when it will open its first outlet in the country is still unknown.