Chipotle Mexican Grill
Chipotle Mexican Grill
IBD Stock Analysis
- Shares pulled back near their 10-week moving average before rebounding
- Investors could take position now and add more if shares hit a new high
- Composite Rating is a best-possible 99; EPS rating now stands at 98
Industry Group Ranking
* Not real-time data. All data shown was captured at
11:37AM EDT on
Chipotle Mexican Grill (CMG) is the IBD Stock of the Day. After weeks of tight trading following a big post-earnings bump, Chipotle stock has rebounded from a key test of investor support, offering an opportunity to take a position.
The setup comes as other restaurant stocks carve out bases, and after the Mexican fast-casual chain this summer reported second-quarter earnings that beat expectations, helped by digital sales and menu price increases.
Chipotle stock, down less than 0.1% to 1916.55 in the stock market today, got a bounce off its 10-week line on Wednesday. Investors could take a position here. The buy range goes from about 1,857.80 to 2,043.58.
The stock’s relative strength line has largely moved sideways since July, when Chipotle reported second-quarter earnings. Chipotle stock jumped on that report. Shares have traded tightly since.
Chipotle Stock: How Covid Investments Paid Off
The company’s investments in digital ordering and delivery paid off last year, as the coronavirus pandemic restricted restaurant service. More recently, analysts have wondered what the economy’s reopening might mean for the chains who benefited most from the takeout boom.
Labor and ingredient costs — and the costs of dining out — are rising, after restaurants have struggled to attract workers and supply chains remain tight.
Still, analysts have found things to like in Chipotle stock. Cowen analyst Andrew Charles has called Chipotle an “all-terrain vehicle” for a post-pandemic world.
The chain has begun testing plant-based chorizo. RBC analysts note that it has considered other items like dessert offerings. The company has begun adding drive-thru ‘Chipotlanes,’ which are geared toward digital orders.
Do Investors Need To Worry About Rising Wages?
BTIG analyst Peter Saleh, who covers Chipotle stock, also suggested investors didn’t need to worry about rising wages and their longer-term impact on margins.
“While we recognize the significant wage increases implemented in June will drag restaurant-level margins, we believe recent price hikes, expansion of higher volume and margin drive-thru locations, and growth in digital sales will ultimately drive operating margins back to their historical peak,” he said in a recent note to clients.
McDonald’s (MCD), nearly flat at 243.03 on Friday, was also in a flat base, with a 247.15 buy point. Domino’s Pizza (DPZ) was down 1.2% to 505 on Friday. That stock, too, was in a flat base with a 548.82 buy point.
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