Monster Stock Contest: Apple or Chipotle?

With Apple Inc. (Nasdaq: AAPL) hitting new highs today of around $625 per share, you are likely to see the media roll out all kinds of stories (like this one). But the relentless focus on Apple misses other monster stocks that have made investors rich -- like Chipotle Mexican Grill (NYSE: CMG).

In fact, Chipotle also hit a new high last week, but you won't see that blaring in the headlines like Apple. Today, Chipotle was trading at $420 per share, just off its all-time high of $426.

They're both huge winners, but I think the Chipotle story is more interesting because it's about tacos. Everybody knows the Steve Jobs story -- the perfectionist Buddhist who built the perfect tech company. Yawn. Isn't it harder to get rich rolling out a string of mainstream taco stores?

With a 3,000% 10-year return, Apple still has Chipotle beat over the long run (Chipotle has returned about 1,000% since going public in 2006). But in the past two years, Chipotle's share price has accelerated and CMG investors beat Apple investors by almost two-to-one during that period. Chipotle is up 250% since March of 2010 and Apple is up a paltry 150%.

Battle of the Monsters: CMG vs. AAPL

Apple has outperformed Chipotle Mexican Grill overall.
But CMG has picked up steam and has Apple beat in the past two years.

Here's another thing: Chipotle is still kinda small, compared to Apple. It's got a market cap of $13 billion, compared with Apple's gargantuan number of $586 billion.

If forced to buy one of the stocks, I can't say which I'd chose (I currently own neither). Chipotle is the pricier of the two with a price/earnings ratio of nearly 40 on sales growth of 22% annually and profit growth of 24%. That's too pricey for the Investor Uprising value formula. Apple is more palatable with a forward P/E of 13 and earnings growth of nearly 100%. What scares me about Apple is the sustainability of growing a $580 billion company.

I suppose if forced, I would have to buy Apple because it is still cheap by the terms of our valuation model. In fact, on paper, without even knowing what it did, I'd buy any company with a P/E of 13 and earnings growth of 100%, according to our value-driven mantra. But I really think in terms of total upside, Chipotle has more potential in the long run.

Chipotle and Apple are both classic "10-baggers" or better in Peter Lynch terms -- that is they allow you to multiply your investment by a factor of 10. How easy will it be for them to do it again? I would think it would be easier for Chipotle to get to $130 billion than it would be for Apple to get to $5 trillion.

Chipotle has gone from about 500 to 1,200 company-owned restaurants since 2005. In contrast, there are 33,000 McDonald's (NYSE: MCD). And YUM! Brands (NYSE: YUM), which operates Pizza Hut, KFC, and Taco Bell, has 37,000 restaurants. So there is still potential for lots of growth at Chipotle, though I'd rather seek it at a better price.

If you are looking at another Chipotle story, Buffalo Wild Wings (Nasdaq: BWLD) offers some promise at a better price. It has a forward P/E ratio of 22 and an earnings growth of 35%. The Minneapolis-based restaurant franchise company has 827 restaurants in the United States and Canada, so in restaurant concept terms, it's still just getting rolling.