Thursday, October 20, 2016

Let's Talk Chipotle

Ticker Symbol CMG

Let's get right into it. I love Chipotle. Their food is a go to lunch, dinner, snack,

anything really. They had that health scare (E. Coli) late in 2015 that absolutely killed their stock price. And actually it hasn't really recovered since then. They tried bringing back their customers by offering a free meal to people but ultimately that didn't work. People came back for THAT free meal, but then continued to stay away. I saw a noticeable difference in the lines at the chipotle I go to when that E. Coli seemed to really break out. In October, 2015 the stock price was at around $725. By the turn of the new year, the price got as low as $410. HUGE loss. Since then, it has tried making a comeback, but quickly fell back down with reports that it was no longer number 1 or 2 in their fast food/fast casual food category. As I write this, the stock price currently sits at $405.10 and I think that it represents a beautiful buy point. I'll try and explain my thought process here...

I like to look at technical indicators. I'm not 100% certain they work for me, but thats what I like and you've seen the name of this blog so, there. Anyway, technical. Lets take a look at stockcharts and see what it looks like. 

Okay, I didn't look at this chart before I started and it is not as convincing as I would have liked, but I'm gonna power through this anyway and do my best. What I like to look for is the MACD crossing over the moving average line. (The black line crossing over the red line). That is typically a very bullish pattern. If you take a look at the patter you can see that when the MACD crosses the moving average line the stock price tends make a very significant increase.

A second indicator I like to take a look at are the stochastics. I know I can't do a good job of explaining this so I will let investopedia do it for ya. Take a minute or two to peruse it. Okay, got it? Great! 

So if we take a look at the stochastic chart, we can see the black line has just crossed over the red. Now theres a good indicator of a bullish future albeit short term. If you noticed, we are looking at a daily chart. In my case, I am looking shorter term which is why I chose daily instead of a weekly view of this stock.

In some other case I like to look at chart patterns and usually like to have at least two bullish indicators before making a move. Like I said, I didn't prescreen

this stock and was a little disappointed with the results so I may wait and keep an eye out for some better looking charts. One thing I will say is that Chipotle did introduce chorizo as a new protein option and that may be their best move in a while. The same thing over and over and over and over and over can get repetitive and boring so I think adding things to their menu is a pretty good idea.

If you made it this far, congrats! You somehow weeded through my writing. I'm still new at this and would love some feedback. Good or bad. This one felt all over the place and maybe not as substantive as I first imagined, but let me know! I want to get better, maybe even smarter. Any feedback is benefited. 

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