We recently compiled a list of the 12 Best Fundamental Stocks to Buy Now. In this article, we are going to take a look at where Chipotle Mexican Grill, Inc. (NYSE:CMG) stands against other best fundamental stocks to buy now.
The S&P 500 index closed 0.3% lower at 6,101.24 on Friday, January 24, reversing its course after hitting a fresh intraday record earlier in the session. The Nasdaq Composite and Dow Jones Industrial Average also slipped, with the former dropping 0.5% to 19,954.30 and the latter falling 140.82 points to 44,424.25. This marked the end of a four-day winning streak for the three major indexes. The decline was largely attributed to investors taking profits, particularly in mega-cap tech stocks. Despite this, the market remains bullish, with the S&P 500 and Nasdaq posting their second consecutive positive week, rising 1.7% and 1.7% respectively. The Dow climbed 2.2% over the same period.
In other news, President Trump made headlines on Thursday by calling for interest rates to drop immediately and asking Saudi Arabia and other OPEC nations to lower the price of oil. Market participants are closely watching the President’s statements, which have had a significant impact on the market. However, the market’s optimism is largely driven by President Donald Trump’s pro-business policies, which have boosted risk assets. Investors are also relieved that the President has only made threats on the tariff front, rather than taking formal action, during his first few days in office.
READ ALSO: 12 Most Promising Green Stocks According to Hedge Funds and 10 Worst Performing Energy Stocks in 2024.
In an interview with CNBC on January 23, Mike Bailey, Director of Research at FBB Capital Partners, discussed the current state of the market. He noted that companies have had a great quarter, which reflects the fact that the economy is doing well, people have jobs, and they’re buying things, which trickles down to the market. This, in turn, has a positive impact on the tech sector as a whole. However, Bailey advised investors to take a more nuanced approach and consider the specific fundamentals of each company.
Bailey believes that large-cap companies have the greatest opportunity to meet or exceed investor expectations for growth. He noted that while small caps are trading cheaper, they may not be the best option for long-term investments or high-conviction plays. Bailey explained that his firm’s approach is focused on identifying companies with strong earnings growth potential, and larger cap companies tend to have more resources and a stronger track record of delivering on their growth promises. However, he did acknowledge that small caps can be a good option for investors who are looking to capitalize on a short-term economic cycle or recovery.
Bailey emphasized the importance of looking beyond the top ten stocks that make up 50% of the market, which often dominate the conversation. He suggested that there are plenty of other companies that are worth considering. These companies, according to Bailey, offer a compelling combination of growth potential, valuation, and dividend yield, making them attractive options for investors looking to diversify their portfolios.
Furthermore, Bailey emphasized the importance of having a long-term perspective and not getting caught up in short-term market fluctuations. He encouraged investors to focus on the underlying fundamentals of each company and to avoid making emotional decisions based on market volatility.
Large-cap companies with stable revenue and consistent net income growth remain attractive options for investors seeking reliable returns and long-term stability.
A chef plating up a wide variety of dishes for a restaurant chain.
Our Methodology
We used Blue Chip ETFs and financial media reports to compile a list of 25 companies with strong fundamentals. We then narrowed our choices to 12 stocks with a 10-year revenue growth rate between 8% to 20% and a 10-year net income growth rate of at least 8%, informed by reputable sources, such as SeekingAlpha. Then we used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holdings: 69
10-Year Revenue Growth Rate: 10.96%
10-Year Net Income Growth Rate: 13.91%
Chipotle Mexican Grill, Inc. (NYSE:CMG) is a fast-casual restaurant chain specializing in burritos, tacos, and other Mexican-inspired cuisine. The company has been a leader in the industry for over three decades and operates over 3,600 locations primarily in North America.
Chipotle Mexican Grill, Inc. (NYSE:CMG) is investing in new technologies and initiatives aimed at enhancing the customer experience and improving operational efficiency. One key area of focus is on throughput, or the speed at which customers can be served during peak hours. The company has set a goal of increasing the number of entrees served per 15 minutes, with a target of reaching the low 30s, up from the current mid-20s. To achieve this, Chipotle Mexican Grill, Inc. (NYSE:CMG) is implementing new equipment and processes, such as dual-sided planchas and produce slicers, to streamline food preparation and reduce labor costs. Additionally, the company is investing in digital technologies, including AI-powered marketing and loyalty programs, to drive customer engagement and retention.
Another key area of focus for Chipotle Mexican Grill, Inc. (NYSE:CMG) is international expansion. The company has recently opened its first restaurant in Dubai and is planning to accelerate growth in Canada, where it currently has almost 50 locations. In Europe, Chipotle Mexican Grill, Inc. (NYSE:CMG) is working to refine its menu and operational systems to better meet the needs of local customers, with a focus on delivering high-quality, sustainable food at a competitive price.
Overall CMG ranks 12th on our list of the best fundamental stocks to buy now. While we acknowledge the potential of CMG as an investment, our conviction lies in the belief that 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
