By Peet Serfontein & Zimele Mbanjwa
We initiate a long position with a target price of $67 and a stop-loss of $56.
Chipotle Mexican Grill, Inc. is a restaurant company. It owns and operates Chipotle Mexican Grill restaurants, which feature a menu of burritos, burrito bowls (a burrito without the tortilla), quesadillas, tacos, and salads. The company operates close to 3 500 restaurants, mainly in the United States.
Over the last few years, Chipotle has gained market share in the US quick service restaurant space with same-store sales outpacing peers on the back of a solid loyalty and marketing approach and strong digital order growth. The company boasts an exceptionally strong balance sheet with no debt and over $2 billion in cash.
Technically, the price has formed a base at its 200-day simple moving average (SMA), which presents a promising investment opportunity (see the insert on the main chart). It signals strong underlying support and investor confidence at this level. Additionally, a rising 200-day SMA confirms sustained bullish momentum, and if the price remains above it, the stock will maintain a positive technical outlook.
A price in the accumulation phase out of the Wyckoff Price cycle acts as additional bullish support.
Further support is evidenced by fading downside price momentum, according to the Moving Average Convergence Divergence (MACD) histogram, and recent sideways trajectory of the On-balance volume (OBV) indicator.
| Share Information | |
|---|---|
| Share Code | CMG |
| Industry | Consumer Services |
| Market Capital (USD) | 79.51 billion |
| One Year Total Return | 17.53% |
| Return Year-to-Date | -3.23% |
| Current Price (USD) | 58.35 |
| 52 Week High (USD) | 69.26 |
| 52 Week Low (USD) | 47.98 |
| Financial Year End | December |
| The stock performed well over the last 12 months and the recent dip in price presents an attractive buying opportunity as various technical indicators point to a potential trend reversal and sustained upside. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY23 | FY24E | FY25E | FY26E | |
| Headline Earnings per Share (USD) | 0.90 | 1.12 | 1.32 | 1.57 |
| Growth (%) | 24.50 | 18.17 | 19.17 | |
| Dividend Per Share (USD) | 0.00 | 0.00 | 0.00 | 0.00 |
| Growth (%) | - | - | - | |
| Forward PE (times) | 52.24 | 44.20 | 37.09 | |
| Forward Dividend Yield (%) | 0.00 | 0.00 | 0.00 | |
| The group is expected to maintain steady double-digit earnings growth over the medium term. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view:
| Share Name and Position | KMX US - Time to exit (Close the position) |
AMGN US - Buy (Continue to hold) |
TDG US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 76.44 | 267.10 | 1 292.86 |
| Current | 87.59 | 284.02 | 1 364.89 |
| Movement | +14.6% | +6.3% | +5.6% |
| The trade has reached our proposed time to exit, and we advise taking profit at this level. |
The price is in a steady upward trend, which remains of interest. The price is above its 200-week SMA and fading downside price momentum is supportive.
Our profit target remains at $300 with a trailing stop-loss at $270.60. Exit the trade by 26 March 2025. |
A smaller steep upward tilting inclining channel pattern remains of interest. The price is above its 200-day SMA, and the start of upside price momentum is supportive.
Our profit target remains at $1 500 with a trailing stop-loss $1 291. Exit the trade by 14 February 2025. |
| Share Name and Position | DOV US - Buy (Continue to hold) |
MPWR US - Buy (Continue to hold) |
STE US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 194.48 | 617.57 | 217.20 |
| Current | 205.42 | 636.78 | 221.7 |
| Movement | +5.6% | +3.1% | +2.1% |
|
Seasonal trends in the price remains of interest. The price is above its 200-day SMA. Fading downside price momentum is supportive.
Our profit target remains at $214 with a trailing stop-loss at $197.50. Exit the trade by 9 May 2025. |
A gap in the price action remains of interest. The price is sandwiched between its 200-week and 200-day SMAs. Fading downside price momentum supports the trade.
Our profit target remains at $788 with a trailing stop-loss at $571. Exit the trade by 2 April 2025. |
An Elliott wave forming a trough remains of interest. Trading just below its 200-day SMA. Fading downside price momentum supports the trade strategy.
Our profit target remains at $239 with a trailing stop-loss at $213. Exit the trade by 18 April 2025. |
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