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In a recent episode of CNBC’s “Mad Money,” host Jim Cramer lauded Chipotle Mexican Grill Inc. (NYSE:CMG) for its ability to thrive despite a sluggish economy, attributing its success to its “self-help” strategy.
What Happened: Cramer, on Thursday, highlighted the performance of companies that can sustain growth despite economic challenges. He specifically pointed to Chipotle, commending its ability to improve and expand its operations, reported CNBC.
"When we're looking for reasons to buy a stock in this environment, we want companies that generate constant self-help. Chipotle does it by improving throughput — how many people that they can serve, say, every 15 minutes," he said. "It just keeps getting better and better and that's got nothing to do with GDP or inflation woes."
The fast-casual chain recently released its quarterly earnings, surpassing Wall Street’s expectations. Despite raising prices, Chipotle experienced a surge in both sales and foot traffic, leading to a more than 6% increase in its share price by Thursday’s close.
Cramer suggested that Chipotle’s success could be attributed to its ability to meet consumer demand by enhancing its service speed, a strategy that is independent of broader economic factors like inflation and GDP.
He also noted that this kind of “self-help” approach could counteract the market’s current concerns, particularly in light of the ongoing challenges such as increased interest in the bond market.
"It takes a special kind of stock to do well when the economy's slowing while inflation just won't quit," he said.
Why It Matters: Chipotle’s recent financial performance has been impressive. The company’s first-quarter revenue increased by 14.1% year-over-year to $2.702 billion, beating the consensus estimate. The company’s comparable restaurant sales also saw a 7% year-over-year increase, driven by higher transactions and a 1.6% rise in the average check.
Chipotle’s strong financial results led to a rise in its stock price, prompting analysts to raise their forecasts for the company’s future performance. The company’s international expansion also reached a milestone with the opening of its first location in Kuwait City, marking a decade of international growth.
Image Via Shutterstock
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