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1 Reason Chipotle Mexican Grill Stock Is Flashing a Giant Buy Signal Right Now
Chipotle Mexican Grill (NYSE: CMG) investors have been on edge since the announcement of the departure of powerhouse CEO Brian Niccol in August. The stock fell after its split in June, and it’s tentatively making its way back up as investors get comfortable with the idea that the chain can go on even without Niccol leading the way.
If the market had any more quibbles with that notion, the company just made it clear that it’s not stepping away from its strong leading position in the fast-casual restaurant space, flashing a bright buy signal to investors.
The unstoppable burrito king
Chipotle has become the go-to spot for reasonably priced fast-casual fare. It promotes itself as having fresh, healthy food, and it innovates with its menu to stay on top of trends.
It attracts an affluent clientele that’s more resilient despite inflation, and it has done well under the most adverse circumstances. It’s one of a few restaurant chains that didn’t miss a beat during the pandemic, without even one quarter of sales declines or losses.
In the 2024 second quarter, sales were up 18.2% year over year, driven by an 11.1% increase in comparable-restaurant sales. Operating margin expanded from 17.2% to 19.7%, and earnings per share (EPS) were up from $0.25 last year to $0.33 this year. That might have been somewhat inflated by stock-split hype, but it wasn’t an unusual quarter for the company.
It’s still opening up new stores at a fast clip, with 52 in the quarter and about 285 expected for the full year. It plans to reach about 7,000 in North America, up from around 3,500 today, giving it plenty of years of growth from new stores alone, but it’s starting to look into international markets as well.
What Chipotle is up to
Chipotle wasn’t always this successful. It was dealing with some major fallout after E-coli was discovered in its restaurants, and Niccol was brought in to turn things around.
The question on investors’ minds has been whether or not it can keep up its success without its leader. Niccol is a star at developing working processes and creating team leaders out of management. He also knows how to cultivate a brand and market it.
Now that he has infused this culture into the company at all levels, the likelihood is that the new management, under interim CEO and former chief operating officer Scott Boatwright, will keep things moving along. So far, Chipotle has not brought in outsiders; it’s letting the insiders steer the ship, and that certainly looks like the right move. It doesn’t need a new brand.
Last week, the company made some announcements that should inspire confidence in the new management. It launched a fund called Cultivate Next in 2022 to invest in companies that align with its vision of creating a better world and helping further its goal of 7,000 stores. Through this fund, it’s now investing in two new concepts.
The first is an Australia-based supply chain platform called Lumachain that uses artificial intelligence (AI) to trace products as they move through the supply chain from farm to store in real time.
The second is a fast-casual dining concept called Brassica that’s focused on Eastern Mediterranean food. It’s like a Chipotle with a different spin, reminiscent of Cava. It has only six stores right now, but with Chipotle’s resources and by following its proven model, that could seriously expand.
Does this point to new directions for Chipotle? Not right now, but it could certainly pull some tricks like that out of its sleeve. If it goes well, the chain has the funds and opportunities to reach into many different concepts that could expand its potential and achieve an even longer growth runway.
Cultivate Next has already invested in several other programs, and this could be an incubator for serious growth initiatives in tech, AI, and restaurant concepts. Chipotle stock jumped on the news.
You won’t get a deal on this stock
Chipotle’s price-to-earnings ratio (P/E) has been rich for a long time, and you might have already missed the chance to buy it on the cheap. Even that’s relative: The P/E hadn’t dipped below 48 even at the recent low. However, now it’s back up to 58.
That speaks to investor confidence in Chipotle stock. With Niccol or not, Chipotle has an excellent, reliable growth model that has returned incredible gains for investors in the past. New management is showing its strength and its willingness to be bold in the signature Chipotle fashion, and the company is in a good position to keep creating shareholder value well into the future.
Don’t miss this second chance at a potentially lucrative opportunity
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 14, 2024
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Cava Group and recommends the following options: short December 2024 $54 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
1 Reason Chipotle Mexican Grill Stock Is Flashing a Giant Buy Signal Right Now was originally published by The Motley Fool
The habits of millionaires are a topic of interest when it comes to financial advice. After all, unless they received a large chunk of money as an inheritance or gift, most millionaires had to be smart with their money to get where they are.
Learning how millionaires accumulate wealth — and where they keep it — can provide valuable insights for anyone focused on growing their money. One common question is whether or not millionaires keep money in checking accounts.
Studies show that in recent years, millionaires are keeping a significant portion of their wealth in cash. According to CNBC’s , that portion was about 24% in 2023. While this doesn’t necessarily mean a quarter of a millionaire’s wealth is sitting in a checking account, it does indicate the importance of maintaining liquid assets. And a checking account can be a helpful tool for doing so — whether or not you’re a millionaire.
Anyone, regardless of net worth, can find value in a checking account. Checking accounts allow unlimited deposits and withdrawals, check writing, bill pay, and other features to help you manage your money day-to-day.
While millionaires may keep large portions of their wealth in other deposit accounts and investments, some may use a checking account to manage daily spending. Millionaires also recognize the importance of having liquid assets, like funds in checking and savings accounts. Accessible cash lets you cover unexpected expenses without needing to sell off investments, borrow money, or pay a penalty for tapping your retirement savings early.
The amount of money a millionaire keeps in their checking account is highly personal and depends on preference. However, because checking accounts rarely earn competitive — if any — interest, some millionaires intentionally limit their checking account balance. Some may choose to keep the bare minimum, such as a couple of months’ worth of essential expenses, in their checking accounts, keeping the rest of their wealth in more lucrative assets.
Regardless of preference, it would be surprising for a millionaire to keep more than $250,000 in a single checking account. That’s because the Federal Deposit Insurance Corp. (FDIC) only insures up to $250,000 in deposits per institution, per account holder.
While millionaires may use checking accounts for day-to-day financial transactions, they may also use some of the following accounts in addition to, or in place of, a checking account:
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Savings accounts: Like checking accounts, savings accounts provide a high degree of liquidity, allowing you to access your money as needed for regular or unexpected expenses. High-yield savings accounts, in particular, give millionaires an extra bang for their buck. Some of the best accounts currently offer rates upwards of 4% versus the national average savings account rate of 0.46%.
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Cash management accounts: Cash management accounts (CMAs) pay competitive interest rates while maintaining more accessibility than a savings account. Some CMAs come with a debit card and ATM access, and many provide extended FDIC coverage limits by “sweeping” additional deposits into partner banks. CMAs are available at brokerages, not banks, facilitating easy transfers between investment and cash accounts.
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Money market accounts: Similar to CMAs, money market accounts combine features of checking and savings accounts, often paying competitive interest rates and providing check writing and ATM access. Banks and credit unions offer these accounts, which are federally insured. Minimum opening deposit and minimum balance requirements are often higher than those for standard savings accounts.
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Retirement and tax-advantaged accounts: Millionaires understand the importance of investing for their later years, and retirement accounts such as 401(k)s and IRAs allow them to do so in a tax-advantaged way. Some retirement accounts, like 401(k)s, are offered by certain employers. Others, such as traditional and Roth IRAs, are available to anyone.
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Brokerage accounts: The IRS limits contributions to tax-advantaged accounts, and millionaires typically invest beyond these limits. They do so with taxable brokerage accounts, which can hold investments such as stocks, bonds, and mutual funds without contribution limits.
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Other investments, like real estate, commodities, and art: Some millionaires may decide to diversify their portfolio with other investment types. These could include real estate investments, such as investment properties or real estate investment trusts (REITs); commodities, such as metals or energy products; art; and more.
The amount of money millionaires keep in their checking accounts depends on personal preference. While some millionaires may keep six figures in their checking account to maintain a comfortable cash cushion, others may choose to keep the bare minimum in checking. You wouldn’t expect millionaires to keep more than $250,000 in a checking account, however, because balances over this threshold aren’t typically insured.
There’s no single bank that’s a favorite among millionaires; it’s another matter of preference. However, millionaires are likely to bank with institutions that offer private banking to those who meet specific financial requirements. Private banking may include wealth planning services, waived fees, dedicated bankers, and additional perks. J.P. Morgan Private Bank, Citi Private Bank, and Bank of America Private Bank are among some of the most popular banks for millionaires.
Billionaires may have checking accounts, but they likely use accounts that cater to ultra-high-net-worth individuals. These accounts may come with perks such as a dedicated banker, waived fees, and competitive interest rates. Alternatively, billionaires may opt for a cash management account with higher FDIC insurance coverage limits and checking account features.
No rule says you can’t have a million dollars in a checking account, but FDIC insurance typically only covers up to $250,000. Plus, you can get a bigger return on your investment by keeping $1 million elsewhere. One alternative is a cash management account, which acts like a checking account but generally earns higher interest. Plus, many cash management accounts insure more than the standard $250,000 by sweeping funds into multiple partner banks.
Lumen Technologies, Inc. (NYSE:LUMN) shares are trading higher on Monday after the company announced it is partnering with Meta Platforms, Inc. (NASDAQ:META) to significantly increase Meta’s network capacity and help drive its AI ambitions.
Lumen’s partnership offers Meta enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and enabling it to serve billions daily.
Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer, said, “We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
Lumen Technologies said its Private Connectivity Fabric enables long-term network capacity for Meta’s AI.
Alex-Handrah Aimé, director of Meta’s Network Investments stated, “Our AI tools are performing increasingly more complex tasks including enabling conversations in a variety of languages and translating text to images in real time, while helping people interact with the world around them in new, immersive ways.”
Lumen will report third quarter 2024 results on November 5, 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Utilities & Communication Services ETF (NASDAQ:PSCU) and First Trust Cloud Computing ETF (NASDAQ:SKYY).
Price Action: LUMN shares are up 9.50% at $7.38 at the last check Monday.
Image via Shutterstock
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This article Lumen And Meta Join Forces To Boost AI With Flexible, On-Demand Network Solutions originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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