Tuesday, January 24, 2006

Get in Line: Chipotle

This is going to be a hot IPO.

Rinse and repeat: this is going to be a really hot IPO.

After months of speculation and torture, on Thursday American icon McDonald's (MCD) will finally spinoff fast-casual Mexican food chain Chipotle (CMG).

The chain will raise close to $150M dollars in order to pay off some debt, cash out insiders (Chipotle opened in 1993), and raise capital for future growth & expansion.

That's expansion with a capital "E," in case you didn't hear.

Chipotle may open as many as 100 new stores in 2006.

Do you know why everyone and their grandmother wants a piece of this bad boy?

It's pretty simple, really.

One, Chipotle's food rocks -- we urge you to spend an hour there; you won't want to leave.

Two, Chipotle priced its food perfectly -- for less than $10, you get a mean burrito and a Corona.

Three, there is indeed a market for Chipotle. As it stands, it's biggest rival is Wendy's (WEN) Baja Grill. Based on the way investors are (mis)treating Wendy's, it's as clear as day: Chipotle's going to use Baja to mop the floor.

Chipotle is profitable and we are confident Chipotle will zoom to the $30-$35 range within its first 48 hours of trading.

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