Rising Gas Prices Will Put Ceiling On These 2 Restaurant Stocks

I read an excellent blogpost by Bruce Krasting Saturday on rising gas prices. I think the risk of rapidly rising gas prices is not reflected in the markets. I believe some consumer discretionary stocks will take significant hits if gas prices hit $4.50 or $5 a gallon. Consumers have been bolstered over the winter by mild temperatures and low fuel oil and natural gas prices. As we push into spring, those tailwinds will recede, and the marginal consumer will be hit hard by rising costs to fill up the tank. I also think restaurants will be hit by rising food costs, and they could possibly take a margin hit as Obamacare is implemented. Here are two restaurant stocks I would avoid based on current valuations.

Chipotle Mexican Grill ( CMG ) - "Chipotle Mexican Grill, Inc. develops and operates fast-casual, fresh Mexican food restaurants in the United States, Canada, and England. Its restaurants primarily offer burritos, tacos, burrito bowls, and salads. As of December 31, 2011, it operated 1,230 restaurants, which includes 1 ShopHouse Southeast Asian Kitchen " (Business Description from Yahoo Finance).

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