The Exchange

Cruel Summer for Chipotle, but Sprint Nextel Shines

The Exchange

The stock market has been positive overall this summer, but as is always the case, there are laggards who miss the rallies. One of the uglier showings of the past three months comes courtesy of a fast-food chain that finds itself in the news this week for a PR misstep.

That would be Chipotle (CMG), whose shares, FactSet data show, have fallen 26.6% since the close on Friday, May 25, the last trading session before the unofficial beginning of summer.

View photo

.
Stock traders. Photo credit AP
Most of what's responsible for the burrito seller's drop actually occurred in July, when a sales shortfall sent the stock plunging more than 20% in a single session. Trouble is, it hasn't recovered. From its levels above $400 at the end of May, Chipotle's stock is now around $293.

Shareholders who've been holding on aren't the only people who are irritated. It turns out customers at certain restaurants are grumbling, too. That's because of reports that in some markets, Chipotle has been rounding the bill by a few pennies here and there in an effort to keep traffic flowing more effectively. Sometimes it's up, and sometimes it's down, and in terms of actual money it probably doesn't amount to much in the end. However, the principle is at least a little disturbing if you're caught on the round-it-up side. Even if only a cent or two is what's involved, many of us would rather pay what we expect to pay, and not get hit by a surprise surcharge. Can't they just tweak the menu prices and call it a day?

At any rate, back to the stocks. While Chipotle has been laid low by the revenue disappointment -- by the way, that "disappointment" came as a result of sales only growing 21% year over year -- it's not the worst stock on the S&P this summer. The biggest percentage decline belongs to coal company Alpha Natural Resources (ANR), down 45.5% from north of $11 to $6.14.

Other underperformers are chipmaker AMD (AMD), down 39.1%, and school owner DeVry (DV), off 32.2%. Iron ore company Cliffs Natural (CLF) has lost 25.7%, FactSet indicates.

The other side of the coin is where you would have made the most money, and important to remember is that this has been a solid summer for the market overall, with the S&P gaining around 6%. Leading the way has been none other than phone company Sprint Nextel (S), up 85.1% since the last days of May. Another top stock is also in the telecom area, wireless services provider MetroPCS (PCS), better by 48.3%.

But coming in at No. 2 behind Sprint is solar module firm First Solar (FSLR). This stock has been punished looking back over the longer term -- in the past year it's down 76%. Still, owners have gotten a small measure of revenge this summer, as the shares have added 79%.

As an aside, this clearly illustrates hard it is to get back to even after a steep selloff. First Solar has dropped from $102 in August 2011, and to return to that level, it needs $78 of appreciation, or essentially another 400% increase from here.

Rounding out the top five, again based on FactSet figures, are wine and vodka seller Constellation Brands (STZ), up 67.7%, and refining company Tesoro (TSO), with a gain of 66.5%.

Rates

View Comments (52)