Buy Despite The p/e

Article Excerpt

CHIPOTLE MEXICAN GRILL INC. (New York symbols CMG $56 and CMG.B $56; Aggressive Growth Portfolio, Consumer sector; WSSF Rating: Speculative) operates a chain of over 500 Mexican food restaurants in 23 states. It plans to open roughly 60 more outlets this year. Chipotle feels its use of organic foods and traditional cooking methods give it an advantage over other casual dining restaurants. In October, McDonald’s handed out all of its Class ‘B’ common stock (10 votes per share) in Chipotle to its own stockholders through a special exchange offer. McDonald’s structured the offer so that its stockholders could acquire Chipotle at a 10% discount. We advised McDonald’s investors to tender. They got 0.8879 of a Class ‘B’ Chipotle share for each McDonald’s share accepted. McDonald’s had to pro-rate the offer after it received 14 times more shares than the maximum it said it would accept. As an independent company, Chipotle will have to replace many of the services that McDonald’s provided, such as insurance…

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