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Pros Pick Fast-Food Plays After Chipotle Upgrade

Wednesday, 4 Jan 2012 | 12:55 PM ET

Chipotle shares rose more than 2 percent Wednesday after Goldman Sachs highlighted the fast-food chain, but not all “Fast Money” pros were lining up for Mexican food.

Trader Brian Kelly liked the stock, citing strong fundamentals and increasing margins.

“If it gets over $350, that’s a big breakout in the stock,” he said.

'Buy' McDonald's, Says Goldman
Goldman Sachs reveals the fast food chains it likes and dislikes in a research note. The Fast Money traders discuss, and a look at the top drug picks for 2012, with Barbara Ryan, Deutsche Bank.

Chipotle stock was up midday at $348 per share. With a price increase of nearly 57 percent year over year, it was also the No. 9 top-performing stock of 2011.

Goldman Sachs added Chipotle to Americas Conviction List with an expected EPS growth rate of 35 to 40 percent in 2012. Other favorites on the “buy” list were McDonald’s, Darden and Tim Horton’s.

The Cheesecake Factory, Yum! Brandsand Wendy’s were on the “sell” list, and Dunkin’ Donuts was upgraded to “neutral” from “sell.”

Trader Zack Karabell thought Chipotle stock wouldn’t do well in a significant market pullback.

“I think Chipotle is always a dangerous stock in a volatile market and a good stock in a good market,” he said.

“I’d still lean toward McDonald’s. They just seem to do everything right,” OptionMonster co-founder Pete Najarian said. “That’s the name that’s executing. That’s the name that has even more growth going in front of them in Asian markets.”

Najarian also liked Yum.

“I’d love to see a pullback in Yum to get an opportunity because they’re going to explode,” he said. “They’ve already got 3,000 KFCs in China. I think that’s a market they can still tap into, make even more money over there.”

Trader Jon Najarian said he liked Darden.

“I think overall this stock is cheap,” he said. “I think it still trades higher.”

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Trader disclosure: On Jan. 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long WFC calls; P. Najarian is long MSFT; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long MOS; J. Najarian is long call spreads AAPL; J. Najarian is long call spreads AKS; J. Najarian is long call spreads PNC; J. Najarian is long call spreads GS; J. Najarian is long call spreads CSCO; J. Najarian is long call spreads LULU; J. Najarian is long call spreads TIVO; J. Najarian is long call spreads TIMM

For Barbara Ryan
Abbott Laboratories - is company an Investment Banking client of DBSI and Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.

Bristol Myers Squibb Company is an Investment Banking client of DBSI and Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.

For Mark Gulley
No disclosures

For Stanley T. Crooke
No disclosures

For Ken Sena
Yahoo - Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services from this subject company within the next three months.

Groupon - Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services from this subject company within the next three months.

CNBC.com with wires.

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