Chipotle's stock is having its best quarter ever—here's how to play it

Chipotle's stock is sizzling.

Shares of the fast-casual chain are on pace for their best quarter ever, up about 60 percent year to date and some 80 percent from the December lows.

On Tuesday, the stock reached its highest level since 2015.

Given the surge, market watchers tell CNBC it's not yet time for investors to take advantage of Chipotle's red-hot rally.

Erin Gibbs, research analyst at S&P Global Market Intelligence, said Tuesday that while the company's double-digit profit growth, expansion plans and mobile-ordering boost are generally promising, the stock has run too much for her taste.

"It's a little pricey at this point," she told CNBC's "Trading Nation." "Its valuations are very extended, and ... if they don't beat these really high expectations, if they don't hit every single number, I'm worried about the negative part and [expectations] coming down. And we already know from last year [that] health concerns, data breach, anything can send this stock plummeting. So I'd like to see an entry point closer to about $615. That would make me feel more comfortable."

Frank Cappelleri, chief market technician at Instinet, was also somewhat cautious, telling CNBC in the same segment that the stock has looked "extended" since mid-January.

Cappelleri noted that if Chipotle's stock can break out of its current inverse head-and-shoulders pattern, it could rally into the $700s. But with the current reading on its relative strength index, which tracks buying and selling pressure, he said he'd also advise investors to wait for a better entry point.

"The RSI is at 86, and that is the second-highest level we've seen in its entire history," he said. A reading over 70 indicates that a security is overbought.

"At this point, the stock has done nothing wrong except go up," Cappelleri said. "I think it pauses, and we take advantage of that and buy it on weakness."

Shares of Chipotle made a new 52-week high of $692.75 a share on Tuesday, closing slightly lower at $688.82. They were up 1.7 percent in Wednesday's premarket. Shares are up nearly 110 percent in the last 12 months.

Disclaimer

Are you seeking top-rated responsible investing funds? There's a rating for that

If you want to see how the funds you're invested in fare when it comes to environmental, social and governance factors, there's a rating for that.

The Morningstar Sustainability Rating measures how well an investment fund's holdings stack up on ESG issues compared to its peers.

The measurement is put together using the thousands of portfolios that Morningstar collects from mutual funds, ETFs and managed portfolios around the world. The firm then applies company-level data from its partner firm, Sustainalytics, to come up with asset-weighted scores for funds.

More from Impact Investing:
Leonardo DiCaprio invests in a greener way to save, spend
These companies do the most to help prevent climate change
How investors can save the planet and still make money

Investors can access the ratings by going to the Morningstar website. The score appears as globes, with five representing the highest score and one the lowest. Those symbols appear alongside other fund information, including an overall Morningstar rating. The top 10 percent of funds in each category receive five globes.

The score has provided a way to see how well funds that are branded as ESG funds are executing on those strategies.

"Virtually all of the intentional funds do well, meaning they score at least four or five globes," said Jon Hale, sustainability research expert at Morningstar.

Sign Up for Our Newsletter Your Wealth Weekly advice on managing your money SIGN UP NOW Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy. .investigation-wrapper .description{ text-align:center; padding-bottom:15px; } .nl-privacy{ font-size: 10px; padding-top: 20px; display:block; } .wildcard .investigation-wrapper { -webkit-box-shadow: 0px 0px 4px 0px #999999; /* Android 2.3+, iOS 4.0.2-4.2, Safari 3-4 */ box-shadow: 5px 5px 5px 0px #999989; } .subsection .investigation{ background: #efefef; border-radius: 3px; padding: 10px 20px 20px 20px; } .investigation small{white-space:normal;} .subsection .investigation h1{ text-transform: uppercase; text-align: center; font-family: "Gotham Narrow Ssm 5r"; margin-bottom: 0px; padding-bottom:0px; font-size: 18px; margin-top: 10px; word-spacing: 1.5px; color: #333333; } .subsection .investigation .headline_title { font-size: 28px; padding-top: 20px; display: block; font-family: "Gotham Narrow Ssm 7r"; padding-bottom:5px; } .subsection .email-info { background: rgba(74, 144, 226, 1); max-width: 140px; margin: 0px auto; text-align: center; padding: 6px 1px; color: #fff; border-radius: 5px; } .subsection .email-info { color:#fff; } .subsection .email-info:hover{ background: #2077B6; } body .subsection.investigation-wrapper{overflow:visible;}

Some exceptions might get just three globes if, for example, they are only underweighting just a few companies based on greenhouse-gas emissions and not applying similar standards to the rest of its holdings, Hale said.

The rating also provides a way to see how well funds that are not billed as ESG focused fare. Conventional funds can also get those high four or five globe scores, Hale noted.

Part of that is due to the fact that there are fewer ESG funds overall.

"The top third of each category gets four or five globes just by definition," Hale said. "There aren't enough intentional funds to populate those spots, so conventional funds do make it there."

show chapters The $5 trillion global insurance industry's natural disaster problem    3:04 PM ET Fri, 15 March 2019 | 09:46

The conventional funds that tend to do well emphasize factors related to company quality, such as consistent earnings growth, competitive advantages and strong management, Hale said.

Since the rating was launched in 2016, the firm has noticed a couple of trends.

One is a record number of flows into ESG funds in the U.S. "Clearly, there's enhanced investor interest in general," Hale said.

More globes, more inflows

Another development is fund flows that correspond to the globe ratings. Research from the University of Chicago found that funds with five globe ratings attracted $24 billion in additional inflows after the first year the ratings were out. One globe funds, meanwhile, declined by about $12 billion.

"You put those two together, and I think the ratings have made some difference, for sure."

In 2018 large-blend sustainable funds outperformed conventional funds.

In addition, sustainable world large stock funds also outperformed last year.