Should You Leave Room for Chipotle Mexican Grill Inc. (CMG) in Your Portfolio?

As it stands, however, the biggest threat to Chipotle’s business likely lies in other fast-casual competitors like Panera, whose food quality and price points are much more similar to Chipotle’s. Even still, the threat is likely minimal since few consumers are willing to eat the same food every day. In the end, there’s no reason similar high-quality restaurants like Chipotle and Panera can’t peacefully coexist.

Continued buybacks
If opening 60 locations in the fourth quarter wasn’t enough, Chipotle management still had excess cash on its hands and has also continued reducing the company’s number of outstanding shares through buybacks. All told, as of the end of 2012, Chipotle had spent more than $520 million in the last four years to repurchase stock at an average share price of $135 and still had $80 million left for additional purchases.  Additionally, with the stock still trading nearly 28% below its 52-week-high set last April, the company’s board has already authorized another $100 million for buybacks going forward.

Even so, considering its shares have run up more than 20% over the last three months and currently trade at nearly 37 times trailing earnings, you can’t help but wonder whether Chipotle would be wise to put the brakes on its buyback program for the time being.

Bottom line
Shares of Chipotle may currently look expensive, but long-term investors should rest easy knowing the company still has plenty of room to grow and continues to rightly place its attention on its customers. By methodically choosing patience and efficiency to build its already-strong brand, Chipotle will have no trouble continuing to create shareholder value by Foolishly growing its business with a long-term focus in mind.

The article Should You Leave Room for Chipotle in Your Portfolio? originally appeared on Fool.com and is written by Steve Symington.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread.

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