Nvidia Still Pricey, But Investor Warns About Another More Expensive Stock: 'Good Time To Take Profits'

Nvidia Corp. NVDA has seen its stock soar as exposure to the thriving artificial intelligence technology sector has bolstered its fundamentals, drawing investor enthusiasm. But another stock belonging to the consumer discretionary sector could beat Nvidia in terms of its expensiveness, an investment advisor said on Friday.

What Happened: Chipotle Mexican Grill, Inc. CMG, a chain of fast casual restaurants, commands a higher forward price-earnings multiple than Nvidia, said Ram Ahluwalia, founder of Lumida Wealth, an investment advisor focusing on alternative investments and digital assets, on X, formerly Twitter. According to data provided by Yahoo Finance, Chipotle’s forward P/E is 59.52 compared to Nvidia’s 36.36.

The P/E ratio is a measure of the value of the stock vis-a-vis the company’s earnings and forward P/E ratio takes into account future earnings potential. A higher P/E ratio suggests either the stock is very expensive or investors expect higher growth rates from the company.

Ahluwalia said Chipotle stock could be “riding on the momentum that may be at exhaustion.” “Good time to take profits,” he added while stating that he doesn’t hold any Chipotle stock.

“If you know what to buy, when to buy, when to sell, and how much to buy (position size) you've got it all figured out. Easier said than done. People don't talk enough about ‘when to sell.’ This is one of those moments,” Ahluwalia said.

He clarified that the Chipotle business was thriving and not in decline.

“It is time to sell though,” he said.

See Also: Best Consumer Discretionary Stocks

Why It’s Important: Chipotle reported last week first-quarter results that came in ahead of expectations as the burrito chain defied inflationary pressure and managed to see an increase in foot traffic. Despite rising menu prices, the company reported an increase in transactions.

The company also raised its sales guidance for the year.

Chipotle’s board approved a 50-for-1 stock split in March. If shareholders approve the split at the annual shareholders meeting scheduled for June 6, the stock will begin trading on a split-adjusted basis on June 26.

The average analysts’ price target for Chipotle, according to TipRanks, is $3,206.07, suggesting merely 0.60% upside from current levels.

Chipotle ended Friday’s session up 2.41% at $3,186.97, according to Benzinga Pro data.

Read Next: Chipotle Mexican Grill Is In A ‘League Of Their Own’: 7 Analysts Revise Forecasts After Q1 Results

Photo: Shutterstock