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Is Chipotle too hot?

Is Chipotle too hot?

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Is Chipotle too hot?

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Chipotle is hot!

The restaurant chain bringing Mexican cuisine to malls and downtowns in 1,637 locations is reporting fantastic revenue growth. For the most recent quarter, the company saw a 24.4 percent increase in revenue, to $904.2 million. That growth didn't just come from increasing the number of Chipotle restaurants; it's also from the 13.4 percent increase in same-store sales compared to last year.

However, higher food prices took a bigger bite out of profits. The company reported that food costs came to 34.5 percent of sales, 1.5 percentage points higher than last year thanks to higher prices in beef, avocado, and cheese. For that reason, the company announced that it will be increasing its menu prices for the first time nearly three years. The company's lower-than-expected net income of $83.1 million for the quarter was part of the reason shares of Chipotle were down 6 percent on Thursday.

(Read more: Chipotle raising prices as steak, avocados, cheese costs rise)

Yet, despite its 62.5 percent returns over the past 12 months – or, rather, because of it – Ari Wald, head of technical analysis at Oppenheimer & Co., wouldn't buy Chipotle's stock just yet, even though he thinks it's on an uptrend.

"I'm not a buyer because it's not a setup I like," said Wald. "But, truth be told, there are really not many bad things I can say about it."

In general, Wald prefers stocks that are beginning their rallies, not those that are deep in the midst of one. At the same time, he also said he believes that investors shouldn't fight a strong trend, which he believes Chipotle has on its side.

"If you're in it, stick with it," said Wald. "To make money in this market, you've got to let your winners run, and there really is no distribution in this stock that you should be worried about."

For those looking to buy the stock, Wald suggested that investors take a tactical approach by buying at its $500 to $530 support level.

(Read: U.S. barbecues grow pricier as beef, pork reach record highs)

CNBC contributor Gina Sanchez, founder of Chantico Global, agreed with Wald that Chipotle's run is not a new story. She said she believes the stock is now overvalued, but with a lot recent capital expenditures, the company has been able to boost its cash flow.

"By all accounts on a fundamentals scorecard, this company is hitting it on every single metric," said Sanchez. "There's actually still quite a bit of growth left in Chipotle."

Supporting that growth is a recovering economy, according to Sanchez. "It's not a strong recovery," said Sanchez, "but, the thing that you need in restaurants and particularly fast casual is increasing consumer spending and disposable income. And, those things are starting to come back."

Sanchez also said she sees international markets as holding some potential for the chain; as of Dec. 31, Chipotle had only 16 restaurants outside of the United States.

"I think there's growth left in this," said Sanchez. "It is overvalued, and probably now is not the time to buy, but I agree that if you hold it, stick with it."

To see the full discussion on Chipotle, with Wald on the technicals and Sanchez on the fundamentals, watch the video above.

[Disclosures: CMG is covered at Oppenheimer with an Outperform rating.]

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