Chipotle Mexican Grill: Buy on the Recent Upgrade?

Of course, analyst opinions are tricky things to figure out and process. You can't just blindly follow them. And when it comes to Chipotle, you know you might be in for a bit of a ride at times.

Near the end of October, shares sold off after a great earnings report. The Q3 press release showed some awesome numbers. Revenues increased almost 14%, and diluted earnings per share came in at $1.08, a better-than-80% jump. Plus, same-store sales were respectable for the most part, and Wall Street projections were beaten to a pulp. The call was for 88 cents per share, according to Earnings.com. What's not to love?

Well, institutions didn't like the comps guidance, as this Reuters article at the time seems to indicate. Ever since then, I'm not sure you can say that the stock is a guaranteed winner, even with this recent upgrade.

I like Chipotle's long-term prospects, but I would definitely rather check the stock out again when it retreats from current levels. It's not extremely expensive, but I don't find it to be margin-of-safety cheap yet, either. I could be wrong, but I'd rather stay on the sidelines and watch the stock before acting impulsively on the excitement of the upgrade.

Disclosure: I don't own any company mentioned; positions can change without notice.