Yesterday, I gave you the name of a dividend-paying AI stock – a counterintuitive play, considering AI tends to mean growth stocks, and growth stocks typically don’t pay dividends.
Well today I have another counterintuitive stock for you.
It’s classified as a growth stock, but it operates in an industry that most investors would never associate with growth stocks.
Yet, this stock’s performance has crushed most growth stocks – and it still looks to have room to run.
And here’s the sweetener – even though it’s in an industry most would not associate with growth stocks, this company is also getting a boost from generative AI.
Well, that’s enough teasing.
Chipotle Mexican Grill, Inc. (CMG)
Chipotle as a product needs no introduction. But as a stock, there may be a surprising number of investors who are unfamiliar.
Let’s start with its performance. The stock is up nearly 50% in 2023 and is essentially near all-time highs.
Its recent earnings topped analyst expectations, and revealed resilient pricing power amid an inflationary environment. The fast food powerhouse had increased menu prices about 10% compared to a year ago, and yet sales are still going strong.
For FY 2022, the company’s revenue grew by 14%, while its net income surged upward by 38%.
A big growth driver is its digital strategy, such as via its Chipotle Rewards program, which boasts over 30 million members. Chipotle’s digital orders now account for nearly 40% of F&B revenue, and this segment is growing much faster than dine-in.
Going into the second half of 2023, falling avocado prices are expected to support Chipotle’s margins even more.
The company has also been listed as a top beneficiary of generative AI by UBS. The company is positioning itself by funding a forward-thinking venture fund, and has already made advancements by implementing upgraded kitchen management systems and a tortilla-chip making robot named Chippy.
In short, if you’re looking for a stock that is in the middle of blistering growth – consider Chipotle. It’s got more to offer than just delicious burritos.
To your wealth,
Felix @ Ace of Investing