We recently published a list of 10 High Growth Food Stocks to Buy. In this article, we are going to take a look at where Chipotle Mexican Grill, Inc. (NYSE:CMG) stands against other high growth food stocks to buy.
The global food industry has always stimulated economic growth, innovation, and a shift in consumer trends. It is projected to reach $2.2 trillion by 2032 from its market size of $1.64 trillion in 2022, at a compound annual growth rate (CAGR) of 2.99%, according to Market Research Future. Despite food being a necessity, the business dynamics within the food industry are very complex and companies must be adaptable as they navigate the complexities of rising production costs, changing consumer preferences, and global supply chain disruptions.
Within the industry, inflation remains a key topic. While it was soaring in 2022, food prices have since declined. However, they are on the rise again, causing financial strain on both consumers and businesses. As reported by the U.S. Department of Agriculture (USDA) in December 2024, grocery prices went up by 1.8% compared to the previous year, and food-away-from-home costs increased to 3.6%. Especially staple food items, including eggs and beef, had a sharp rise due to the avian flu wave and the supply limitations. These price fluctuations create a challenge for food companies, which must adjust their pricing strategies without sacrificing demand or alienating customers.
On the other hand, consumer behavior is also changing, putting forth factors like health, sustainability, and convenience. Thus, specialty stores have seen an increase in the demand for fresh and raw food. At the same time, budget-conscious shoppers are gravitating toward discount retailers, highlighting the growing importance of affordability. Thus, food companies must meet diverse consumer needs driven by the dual trend of seeking premium and value-oriented products.
Furthermore, technological breakthroughs are also contributing to the industry’s transformation. Supply chain optimization, waste reduction, and increased production efficiency are being greatly aided by automation and artificial intelligence (AI). Moreover, robotics is deployed in food processing to increase production and efficiency, while AI-driven demand forecasting helps avoid inventory problems. Consumers’ growing need for convenience is being met by the usage of digital ordering and delivery platforms, which opens new avenues for revenue growth. By adopting these technologies, companies are keen to improve operations and take advantage of growth opportunities in a market that is constantly evolving.
Even with economic instability, the future of the food industry is promising, driven by global population growth, urbanization, and the expanding middle class in emerging markets. In addition, new investment opportunities are being created by the popularity of plant-based meals and alternative proteins. Thus, big industry players are prioritizing the integration of technology, sustainability, and innovation in their business model to capitalize on future growth potential.
Many stocks stand out for their capacity to capitalize on this growth potential.
Methodology
To curate our list of the 10 High Growth Food Stocks to Buy, we used Finviz stock screener to gather stocks within the food sector with a strong market capitalization. We then narrowed the list based on each company’s five-year compound annual growth rate (CAGR) to identify those demonstrating consistent revenue expansion.
Furthermore, we also considered the number of hedge funds holding stakes in each stock, using data from Insider Monkey’s hedge fund database, which tracks the activity of 1,009 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A chef plating up a wide variety of dishes for a restaurant chain.
Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Funds Holders: 68
5-year Revenue CAGR: 17.20%
Chipotle Mexican Grill, Inc. (NYSE:CMG) is redefining fast-casual dining through its commitment to high-quality ingredients, rapid expansion, and digital transformation. With record-breaking growth and strong financial performance, the company has solidified its place in our list of the high growth food stocks to buy.
The company’s momentum is showing no signs of slowing. Chipotle opened 304 new restaurants in 2024, up from 271 in 2023. The expansion will continue as Chipotle Mexican Grill, Inc. (NYSE:CMG) plans to open between 315 and 345 new locations by 2025 end. This aggressive growth strategy has helped drive total revenue to $11.3 billion, up by 14.6% YoY. Digital sales were significant, accounting for 35% of total revenue, demonstrating the company’s ability to meet the changing preferences of today’s customers.
To support its rapid growth, Chipotle Mexican Grill, Inc. (NYSE:CMG) has prioritized operational efficiency by investing in digital kitchen technology and automation. Investment in automated cooking equipment has increased restaurant throughput while maintaining the brand’s high-quality standards. These technological advancements not only improve service quality, but also allow Chipotle to scale more effectively while remaining profitable.
On the other hand, exhibiting supply chain resilience is a critical feature of Chipotle’s strategy. Accordingly, by sourcing 50% of its avocado supply from outside Mexico, the company has reduced the risk of trade tariffs and supply disruptions. This diversification not only keeps ingredient costs stable, but it also protects the company’s long-term margins.
According to Insider Monkey hedge fund database, investor confidence in Chipotle remains high, with 68 hedge funds holding stakes in the company, as of Q4 2024. Furthermore, the company’s stock has increased by 3.58% in the last six months. Thus, Chipotle Mexican Grill, Inc. (NYSE:CMG) remains one of the top high-growth companies in the food industry, thanks to its clear expansion strategy, ongoing technological investments, and proactive supply chain approach.
Overall, CMG ranks 4th on our list of high growth food stocks to buy. While we acknowledge the potential of CMG as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CMG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
