4 ‘Expensive Stocks’ Worth Every Penny

They're high-priced, but worth the premium

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4 ‘Expensive Stocks’ Worth Every Penny

Chipotle Mexican Grill

cmg 4 Expensive Stocks Worth Every PennyShare price: $423
Year-to-date gains: 42%

Just last year, Chipotle Mexican Grill (CMG) looked like the classic story of a sizzling momentum stock that simply had to cool off. After soaring from around $50 in early 2009 to over $400 in early 2012, investors fled the stock when it failed to meet their super-high growth expectations.

Starting in April of last year, CMG suffered a 45% slide in a mere six months, punting its price back below $250.

Since then, though, investors’ stomachs started rumbling for the burrito-maker once again. The stock’s share price has gained a steady 75% from last year’s October low, including a 42% year-to-date climb. A few reasons: CMG beat earnings in the past two quarters, and is still growing.

In the most recent period, for example, revenue soared 18%, same-store sales gained 5.5% and adjusted EPS grew by more than 10%. And in the first half of the year, the company opened nearly 100 new locations. For the cherry on top, earnings are slated to improve by 20% per year long-term.

There’s always the risk that investors could once again get sick of paying a premium for CMG, and that the stock’s all-time high of $440 will make for some big-time resistance in the near term. But even if the stock bumps into some short-term headwinds, it’s clear that the restaurant chain’s popularity makes it worth a triple-digit pricetag.


Article printed from InvestorPlace Media, http://investorplace.com/2013/09/4-expensive-stocks-worth-every-penny/.

©2014 InvestorPlace Media, LLC

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