Should I take a bite?
Insider buying activity isn’t everything. However, it’s certainly notable when insiders own a huge chunk of the company. You might want to learn more about the large insider purchases in Chipotle Mexican Grill (NYSE:CMG) stock and find out why this particular restaurant chain is worth investing in.
Moreover, you might be surprised to see how Chipotle stock has performed over the past year despite the company’s price increases. This shows that despite the impact of inflation, America’s craving for Chipotle’s burritos has not waned.
Who Swallowed $18 Million Worth of CMG Stock?
Chipotle has some big investors, including Pershing Square Capital Management founder and CEO Bill Ackman. The fact that legendary portfolio manager Ackman recently held Chipotle stock certainly speaks volumes.
This is encouraging, as is the insider purchase of stock by Chipotle director Gregg Engles. According to reports, Ingles purchased 800 shares of Chipotle stock for a whopping $1.8 million last December. It appears to be a family affair since Engles’ wife, Molly Engles, purchased 77 shares of CMG stock for $176,000.
Clearly, the Engles family believes in the future of Chipotle. You can’t blame the fast-casual dining chain, which seems to be doing well despite raising product prices by 3% last year. I wouldn’t be surprised if the company enacts one or more price increases in 2024.
Now many people have become accustomed to these price increases, even if they don’t like them. Moreover, Chipotle has proven that it can succeed even in a high inflation environment. Surprisingly, the restaurant operator reported an 11% year-over-year increase in sales in the third quarter and a 19.5% increase in adjusted earnings.
Chipotle embraces younger customers
CMG stock, which has surged from $1,400 to $2,200 in the last year, has a lot of momentum, but it’s not cheap. But Chipotle’s strong appeal to younger customers could keep its stock value rising in the coming quarters and years.
This is the idea behind the bullish thesis of TD Cowen analyst Andrew Charles, who issued an Outperform rating on Chipotle stock not long ago. Charles has observed that younger consumers, such as millennials and Gen Z consumers, are seeking greater transparency about where their food comes from.
Chipotle emphasizes this type of transparency, and Charles connected the dots between the preferences of young consumers and Chipotle’s potential to capitalize on them.
“As Millennials and Gen Z enter the prime of their purchasing power, younger consumers are 6.6% more likely to consider food transparency (also known as ‘What’s in my food?’) important or very important when making restaurant decisions. It’s high. ”
Younger customers already have significant purchasing power, and this will only grow in the future. Therefore, forward-thinking investors may consider buying CMG stock even if they think it is currently expensive.
CMG stock is by no means cheap, but it can grow as long as customers are willing to tolerate Chipotle’s price increases. Moreover, for momentum-focused traders, CMG stock appears to be the perfect restaurant stock for 2024.
Chipotle stock rose sharply in late 2023, driven by the company’s strong third quarter results. This year, investors should be realistic in their expectations. Even if CMG stock were to rise by half in 2024 compared to last year, it would still be quite impressive.
Chipotle also has a long-term opportunity to capitalize on Millennial and Generation-Z trends. Since the start of the COVID-19 pandemic, young people have had to consider their lifestyle choices. They demanded transparency and sustainability of products, including the food they consume. Chipotle has catered to the needs of younger consumers whose total wealth will increase in the coming years.
If you’re not a billionaire, here’s another piece of good news. You don’t have to be a big-money investor like Ackman or Engles to participate in Chipotle’s future growth. It’s okay to own just one share of Chipotle stock. If you can afford it, feel free to purchase for more than one week.
Ultimately, Chipotle should continue to be a successful business even if it raises its food prices again. So, don’t hesitate to grab some CMG stock and prepare yourself for some tasty long-term gains.
disclaimer: All investments involve risk. Under no circumstances should this article be taken as investment advice or constitute liability for investment profits or losses. The information in this report should not be relied upon for investment decisions. All investors should conduct their own due diligence and consult their own investment advisors when making trading decisions.
