A Fast Food Restaurant to Love

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A new TV commercial featuring McDonald's has hit the airwaves, but it's not advertising the fast food chain's latest creation. Instead, the spot was sponsored by the Physicians Committee for Responsible Medicine, a nonprofit that seeks to link the food McDonald's serves to heart disease.

The Wall Street Journal reported that in the commercial, a woman cries over a dead man who is holding a hamburger. Then golden arches appear over his feet, followed by the phrase, "I was lovin' it," a play on McDonald's slogan, "I'm lovin' it." A voice says, "High cholesterol, high blood pressure, heart attacks. Tonight, make it vegetarian."

While the commercial urges people to eat vegetarian, and singles out McDonald's, the message is broader than that. The group wants people to realize how poor food choices directly affect their health … and not just their weight, the traditional focus of campaigns against fast food.

The commercial only aired in Washington, D.C., so perhaps readers there saw it (if you did, please write in to let me know). But the Physicians Committee for Responsible Medicine is considering running it in other markets, like Chicago, Detroit and Miami.

This negative campaign against McDonald's (and by extension other similar fast food restaurants) could be a boon to one eatery that's capitalizing on the trend toward organic, local food: Chipotle Mexican Grill ( CMG ) .

We've profiled Chipotle here a few times before, but I'll give you a quick refresher. The company serves what it calls "Food with Integrity," which means finding "the very best ingredients, raised with respect for the animals, the environment and the farmers," according to Chipotle's website.

Chipotle currently sources 100% of its pork from ranchers whose raise their pigs outside or in deeply bedded pens, are never given antibiotics and are fed a vegetarian diet. The company says 85% of its beef is naturally raised and 35% of its dairy comes from pasture-raised cows. Chipotle also insists that 100% of its chickens are raised without antibiotics and doesn't work with farmers who use feed additives.

Moving on to non-meat food items. Forty-percent of Chipotle's beans are certified organic and the company is committed to working with family farms and local growing operations when appropriate.

And it's not just the food that has kept Chipotle growing. Management has been expanding locations, with about 120-130 expected to open this year, on top of the 1,000 retail outlets that already exit. Earlier this year, the company expanded outside the U.S., opening its first store in London.

The first Chipotle opened in 1993 and from 1998 to 2006, McDonald's owned a majority interest in the company. This is one reason why Chipotle is so successful today, having learned from the most successful fast food company on the planet. McDonald's divested its interest in 2006, the same year the stock went public.

Since then, we've featured it in several Cabot newsletters as it rose from its IPO price of 22 to around 160 now. It, like the rest of the market, got wiped out by the Big Bad Bear of 2008 and early 2009, but the stock has recovered well and even gone on to hit new all-time highs.

CMG may need a little room to breathe here as it has had a massive run, but there's no reason it can't continue. With good food and good management, this company surely has big things in its future.

In fact, Tim Lutts even named it one of his nine stocks to hold forever on August 23, writing this:

"Chipotle Mexican Grill ( CMG ) has the potential to be the McDonald's of the next half-century … in part because this high-quality burrito shop was spun off from McDonald's in 2006 … so management has been taught well.  Revenues are growing steadily and profit margins are consistently in the high single digits, which is great in the restaurant industry.  (It's my son's favorite restaurant, but I'm not the analyst who submitted it.)"

To learn more about Chipotle Mexican Grill and other leading stocks, check out Cabot Top Ten Weekly , where subscribers are sitting on a 22% profit in the stock.

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In this week's Stock Market Analysis Video, Cabot Market Letter Editor Michael Cintolo says that the stock market continues to inch higher day by day, and most leading stocks are doing the same. Mike also discussed so-called "liquid leaders." Stocks discussed include Apple ( AAPL ), Baidu ( BIDU ), Priceline.com ( PCLN ), Netflix ( NFLX ), Salesforce.com ( CRM ), Las Vegas Sands ( LVS ) and Amazon.com ( AMZN ).

Watch the video!

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Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks


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