Fast Food Frenzy: CMG and MCD Struggle to Regain Investor Interest

Chipotle (CMG) and McDonald's (MCD), two of America's most iconic fast-food chains, have seen their stock prices plummet in recent months. CMG shares peaked over two years ago and have fallen 25% in the last year, while MCD stock has dropped 20% from its late-February high.

Despite still-growing revenue at both companies, investors seem unimpressed with their valuations. CMG trades at a forward price-to-earnings ratio of 27.9x and 3.4x sales, while MCD trades at 21x forward earnings estimates and 7x sales.

CMG generated $11.94 billion in revenue last year, up 5.5% from 2024, with projected growth of 9.2% this year. McDonald's reported a record $26.88 billion in revenue last year, but its growth has slowed to 3.9%. The company expects 4.9% sales growth this year.

Chris Preston, Cabot Wealth Network's Vice President of Content and Chief Analyst, suggests avoiding both stocks due to their high valuations. He recommends Dutch Bros (BROS), a drive-through coffee chain with rapid expansion plans, as a more attractive investment opportunity.