Stock experts have revealed that a popular fast food chain is one of the best stocks to invest in because of its long-term potential.
Chipotle Mexican Grill (CMG) is a worthwhile investment for those looking to make modest gains in the coming years, according to TipRanks Stifel analyst Chris O’Cull.
He recommended buying CMG shares with a target price of $70 as the company is growing steadily. NCB Miami reported.
Based on the analysis of 23 Wall Street experts, the average price target for the coming year is approximately $65 with a maximum of $72.
Chipotle posted a higher-than-expected adjusted profit in the third quarter, despite lower-than-expected sales. The company also experienced a 3.3 percent increase in traffic.
Chipotle Mexican Grill (CMG) is one of the best stocks to invest in, according to experts at TipRanks
There are more than 3,500 Chipotle locations nationwide and the company plans to expand
Chipotle’s comparable restaurant sales growth was 6 percent, which matched well with Wall Street’s average estimate of 6.2 percent.
O’Cull said the chain accelerated transaction growth in September and in the fourth quarter, which started in October.
The stock has a fourth-quarter comparable company analysis – ‘comps’ – of about 5.5 percent.
The figures in this latest quarter point to around 7.5 percent for the full year, O’Cull said.
He thinks the company’s menu has played a key role in the stock’s success and that fourth-quarter gross sales will be specifically impacted by smoked brisket sales.
Experts expect the 12-month price target for Chipotle stock to be a high of $72 and an average of $65.16.
This article caused customers to spend more money at the chain and encouraged new people to buy Chipotle’s food.
Smoked brisket is a fan-favorite product, which the company announced last month it would be re-releasing for a limited time.
“We are listening to our guests and bringing this fan-favorite menu innovation out of the vault after three years,” Chief Brand Officer Chris Brandt said in September.
“This premium protein is sure to appeal to guests who want to taste the difference of brisket prepared the Chipotle way.”
Beyond the products, O’Cull said the company has been working hard to improve the speed at which customer orders are completed.
Customers have previously complained about inconsistent portion sizes
Chipotle has introduced new technology, including a robot, to put an end to the varying portion sizes
Currently, Chipotle serves about 20 meals in 15 minutes. The company’s goal is to increase that number to 30 meals in the same period.
O’Cull believes the company’s technological advancements and improved processes make this goal achievable.
Over the summer, the company announced the development of portion control robots for ordering salads and bowls.
This was part of Chipotle’s response to customer complaints about varied and shrinking portion sizes, demonstrating the company’s commitment to its future, as O’Cull described.
On Tuesday, Chipotle interim CEO Scott Boatwright highlighted the company’s expansion goals during a third-quarter earnings call.
“I have worked with our talented management team to craft and develop our successful strategy, and we will continue to execute on it,” he said, according to QSR Magazine.
“This includes our long-term goals to expand to 7,000 restaurants in North America, increase our AUVs to more than $4 million, and expand our restaurant-level margins and grow internationally.”
One of Chipotle’s main goals is to increase the speed at which they serve meals to customers
Boatwright also said he thinks increasing transit is possible, noting that they have already done so.
During the third quarter, Chipotle saw an increase of 1.2 additional entrees per 15 minutes.
Boatwright said: “We have already learned a lot about both innovations from our crew and our guests, which will be used for future iterations.”
There are approximately 3,500 Chipotle’s nationwide. By 2025, the company plans to add between 315 and 345 additional locations.