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Chipotle Mexican Grill, Inc. (CMG): This Controversial Stock Keeps Crushing its Critics

But those same fast food giants that rode that model to the top are now moving away from it, embracing (at least somewhat) Chipotle Mexican Grill, Inc. (NYSE:CMG)’s innovations.

While Taco Bell has been rolling out its separate Cantina Bell menu, McDonald’s has been adding new items to bolster its core offerings. These changes are embodied in the McWrap — a rolled sandwich made with premium ingredients and offered in six different varieties.

As Forbes contributor BrandIndex notes, McDonald’s is facing a crisis among its younger customers, who prefer Chipotle’s new style of fast food over McDonald’s traditional, greasy burgers.

Buy or sell Chipotle?

Fundamentally, Chipotle’s valuation is difficult to justify. It only makes sense to the buy the stock if one believes the company has discovered a better way of doing fast food. If that’s the case, Chipotle should continue to grow, utilizing new concepts like ShopHouse to conquer the fast food world.

The old giants, however, are cognizant of the shift taking place. Both McDonald’s and Taco Bell have taken steps to capture some of what Chipotle is doing, however, their need to satisfy their core customers leaves them unable to fully reinvent themselves.

Perhaps, at some distant future date, Chipotle Mexican Grill, Inc. (NYSE:CMG) will surpass McDonald’s as the quintessential fast food giant. That possibility though, still seems remote. For the time being, cautious investors should avoid high-flying Chipotle — but at the same time, don’t fall victim to the short selling mentality that fails to fully grasp the concept of what the company represents.

The article This Controversial Stock Keeps Crushing its Critics originally appeared on Fool.com.

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