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Two Ways To Play: A Chip-otle on Traders' Shoulders


Strengthen your portfolio in good times and bad.

Bloomberg reports Chipotle Mexican Grill (CMG) dropped the most since the company was spun off by McDonald's Corp (MCD) back in 2006.

Higher prices for beef and cheese pressured Chipotle's margins and hurt the company's profits. CMG reported net income came in at 74 cents per share, up 23% from 60 cents a share a year earlier, but below consensus expectations of 75 cents per share.

Sales increased 24% to $340 million, trailing consensus expectations by $3.3 million. Same-store sales rose 7.1% in the quarter, compared with an increase of 12% a year ago.

Analyst Larry Miller of RBC Capital Markets cut the stock to "sector preform" from his "outperform" rating. Miller said, "they can't tack 15% to the price in a time when the consumer is suffering anyway." The stock was also cut to "Hold" at Jefferies from "Buy."

CMG shares plunged almost 20% to settle at $67.30.

From the Bull Pen: Bulls can look elsewhere. Is MCD the better play off of its 200 DMA?

From the Bear Cave: Professor Smita Sadana mentioned CMG today on the buzz. Bears can consider her method of "initiating a short position on a low-volume weak-bounce."
No positions in stocks mentioned.

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