The fast-casual leader has been an outstanding stock to own.
Chipotle Mexican Grill (CMG 0.29%) is a perennial market favorite, and it’s been getting extra enthusiasm surrounding its recent 50-for-1 stock split. It operates a successful model of developing healthy Mexican-style dishes using fresh ingredients, and it targets an affluent clientele that’s resilient under inflationary conditions.
Despite its premium valuation, Chipotle’s stock continues to climb, demonstrating that it can carry a price-to-earnings ratio of 66 because its business performance is just that reliable. How much money would you have if you’d invested $1,000 in Chipotle stock five years ago?
The leader in fast-casual dining
Chipotle consistently reports strong increases in revenue, comparable sales, and profits, and that trend continued through the early years of the pandemic when similar restaurant chains were floundering. It has a compelling pricing model with food that’s affordable to its upscale customers even if they’re cutting down on luxuries (and certainly when they’re not).
That was on full display in the first quarter of 2024. Revenue increased 14% in the quarter, coming both from new stores and robust comparable sales growth of 7%. Operating margin expanded from 15.5% to 16.3%.
It’s not surprising that investors love Chipotle stock, and if you would have invested $1,000 five years ago, you’d have $4,200 today.
What will happen in the next five years? You can never know for sure, but there’ doesn’t seem to be any reason to worry about Chipotle’s ability to keep up the momentum. It’s opening new stores at a rapid pace, but still sees tons of opportunities for further store expansion, and the company is branching out deeper into international waters. At the same time, it continues to innovate with new dishes and a more efficient process to keep hungry customers happy and generate higher growth from existing stores.
If you invest $1,000 today, you should see that stake multiply in the long run.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
