Stock to Sell #1: CMG
Chipotle Mexican Grill (NYSE:CMG) has had a great run — up 200% over the last two years. But the company now faces a number of challenges. One is potential market saturation, which would lead to a decline in its record revenue growth. There’s also a new emphasis among consumers on homemade meals as well as upgraded supermarket takeout food.
In short, Chipotle must deal with labor-cost pressures, unstable commodity/food expenses and customers who are concerned about prices. International growth is Chipotle’s big plan, but it’s not clear yet if its spicier foods will translate as well in international markets as menus of competitors such as McDonald’s (NYSE:MCD) and KFC (NYSE:YUM).