Time to short Chipotle

A recent investigation prompts layoffs of illegal immigrants, which will surely increase labor costs.

By Wall Street Media on MSN Money Feb 11, 2011 6:05PM

Written by Douglas Estadt

 

Despite Chipotle Mexican Grill's (CMG) recently reported positive results and its all-too-tasty fajita burrito bowl, we believe shorting CMG will prove to be profitable.  The company's steady rise in stock value and its recent earnings report are trumped by its current labor issue and its overrated build-up by momentum players. A recent investigation by Immigration and Customs Enforcement prompted a major layoff of illegal immigrants that will surely increase the company's labor costs. We consider these facts before shorting the stock:

  •  The massive labor layoff of illegal immigrants means less cheap labor, more expenses.
  • CMG's P/E is about 52, while most of its competitors' P/Es are in the 20s range. The stock is quite overvalued.
  • The tendency to buy only because a stock is rising leaves investors without all of the facts.

·         To hear more about CMG, view the video below.

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2Comments
Feb 11, 2011 9:44PM
avatar
Your going to have your "shorts" handed to you if you short CMG.
Aug 31, 2012 5:13AM
avatar
pay that dude his debt you thief 
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