Chipotle shows that any investor can build wealth investing in high-quality businesses.
Chipotle Mexican Grill (CMG 0.20%) has been one of the best-performing restaurant stocks over the last 15 years. While early investors have made a lot of money even off a small investment, newer investors should still be encouraged by Chipotle’s recent business performance and its impact on the stock’s return.
Earnings per share surged 540% over the last five years. That massive increase in profitability helped drive the share price up 346%, which would have turned a $10,000 investment into $44,670. Management’s focus on profitably expanding the store base means the stock’s run is unlikely to be over.
Chipotle can keep growing
Chipotle just turned in another impressive report for the first quarter. Revenue jumped 14% year over year, while adjusted earnings increased 27%. Management sees full-year comparable-restaurant sales rising in the mid- to high-single-digit range, which should translate into double-digit growth in revenue and earnings.
Management’s focus is driving profitable growth for shareholders. This is why investors should get excited about the company’s plan to accelerate store openings.
The company opened 47 new restaurants in the first quarter, bringing the total footprint to nearly 3,500 stores across the U.S., Canada, the U.K., France, and Germany. It plans to open between 285 to 315 new locations for the year on its way to reaching its long-term target of having 7,000 restaurants in North America.
Chipotle has proven to be a top-tier restaurant business. It survived a major crisis in 2015 around food-borne illnesses associated with its restaurants, and most recently, the pandemic and spiking inflation.
If a restaurant can overcome those challenges, chances are it will continue to reward shareholders for years to come.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
