Chipotle Mexican Grill is the IBD Stock Of The Day for Wednesday, just as CMG stock is added to the SwingTrader line up. Among other restaurants, fast food giants McDonald's and Wendy's are also setting up in flat bases after topping Q1 views in April and mid-May, respectively.
Newport Beach, Calif.-based Chipotle Mexican Grill leads the Retail-Restaurants Group according to the IBD Stock Checkup and is a member of the IBD 50 and Leaderboard lists. The restaurants group ranks a solid No. 19 out of the 197 industry groups tracked by IBD.
The Mexican, fresh fast-casual food chain is on a sizzling hot streak. Chipotle's earnings growth accelerated the last four quarters, reporting an 84% spike to $10.50 per share in Q1 2023. The company also averaged 15% quarterly sales growth during that period.
Meanwhile, same store sales ticked back up to 10.9% growth in Q1. The results beat FactSet estimates for an 8.6% increase after three quarters of slowing gains.
Chipotle guided comparable sales growth in the mid- to high-single digits for its upcoming Q2 results and fiscal year. The company reports second-quarter earnings on July 26.
Wedbush raised its price target on Chipotle stock to 2,300 from 2,200 early Wednesday and maintained its outperform rating on the shares. Wedbush research indicates Q2 same-store sales growth is running in-line to slightly higher than consensus estimates, analyst Nick Setyan wrote in a research note. The firm believes there's likely upside in the second half of the year from traffic-driven comparable sales growth.
Chipotle Stock
Chipotle stock rocketed 20% after breaking out of a cup base on April 25 earnings results. It is trading near its May 22 all-time-high of 2,139.88. Shares are in a profit-taking zone from the previous pattern, but already actionable as it moves higher.
The stock rebounded off its 21-day exponential moving average Tuesday and bounced off its 10-week line on Wednesday. That broke it above a down-sloping trendline, putting it in an early buy zone.
Risk averse investors may want to hold tight for a few days. Shares have traded tightly the last four weeks and are on track to form a flat base after Friday. That pattern would have a 2,139.88 buy point.
CMG stock has a perfect 99 Composite Rating. The Composite Rating combines various technical indicators into one easy-to-read score. It also has a 99 EPS Rating after its streak of accelerating growth. Chipotle's relative strength line is off highs from early May and has a 92 RS Rating.
Chipotle stock vaulted 49.4% so far this year.
Wendy's stock is nearing the 23.90 buy point for its flat base while McDonald's stock approaches the 298.86 buy point for its current pattern.
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