Is Chipotle a Buy under $1,300?

Chipotle Mexican Grill, Inc. (CMG) is a fast-food restaurant chain specializing in Mexican cuisine operating across North America and Europe. It’s been one of the best-performing restaurant stocks of the past decade…

The stock has fared well relative to its peers since the coronavirus hit the US given its extensive drive-thru facility and home delivery system. The stock soared to hit an all-time high of $1,384.46 on September 2nd but lost more than 10% since then to close yesterday’s trading session at $1,234.58. Given the underlying strength in its business and continued expansion of its products, the recent price decline offers a buying opportunity. The stock has gained 47.5% year-to-date.

The company’s strong financials combined with several other factors have helped it earn a “Buy” rating in our proprietary ratings system.

Here’s how our proprietary POWR Ratings system evaluates CMG:

Industry Rank: A

The Restaurant industry is ranked #21 out of 123 industries in the universe. This industry was one of the hardest-hit segments by the pandemic, as dining out became unpopular due to fear of catching the virus. However, the industry has quickly adapted to the new normal by expanding home delivery, takeaway, and drive-thru facilities. Fast food restaurants have gained more traction during this time, as they had well-established home delivery and drive-thru systems in place before the onset of the healthcare crisis.

Trade Grade: B

CMG is currently trading above its 50-day and 200-day moving averages of $1216.71 and $955.20 respectively, indicating a golden-cross bullishness. It has gained 15.4% in the past three months, which reflects a short-term uptrend.

CMG’s digital sales grew 216.3% in the second quarter ended June 2020, accounting for 60.7% of net sales for the quarter. The company opened 37 new restaurants during this time. Despite the pandemic-induced slowdown in business operations, it delivered a net income of…

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