Stocks That Will Hurt Your Retirement: Chipotle (CMG)
I love Chipotle Mexican Grill, Inc. (NYSE:CMG) burritos. I really do. I could quite literally eat one every day of my life and never get sick of them (no E. coli pun intended). But as much as I love the company’s food, the stock is one I’d consider risky as a long-term holding for a retirement portfolio.
Food, like clothing, is subject to the whims of fashion. And Chipotle was one of the first chains to capitalize on the trend toward healthier eating with more organic ingredients. The problem is that there is no real durable competitive advantage there. Any Johnny-come-lately restaurant chain can jump on the organic bandwagon.
Despite the beating that Chipotle stock has taken in recent years, due mostly to its health scandals and poor response, CMG stock is far from cheap at current prices. It trades for 44 times expected earnings. The stock price has been relatively stable for the past six months, and it could be the large losses have run their course. But this is still not a stock I’d want to bank my retirement on.