Chipotle Mexican Grill has generously rewarded shareholders in recent years, with its stock climbing more than 492% over the past five years. That compares to an 82% gain by the S&P 500 index over the same period. Yet, with shares of Chipotle now trading around $660 a piece, investors may be better served with other growth stocks today. Below, three Motley Fool contributors explain why The Habit Restaurants , Hanesbrands, and Starbucks , are three stocks that are growing faster than Chipotle.
Source: The Motley Fool.
Tim Beyers (The Habit Restaurants): When talking about the best burgers in Southern California -- or frankly, anywhere in the U.S. -- In-N-Out Burger and Five Guys, and the competition between them, usually get top billing. And yet it's the Habit Burger that Consumer Reports rates as America's best.
Invented in 1969 in Santa Barbara, CA, the "Charburger" has enough of a following that The Habit Restaurants is outgrowing Chipotle today. Revenue was up 42.1% in 2012 and another 43% in 2013. Gross profit surged 48% and 39.8%, respectively, over the same period. Yet, the growth doesn't stop there.
In Q3,total revenue soared 57%, gross profit improved 57.6%, and cash from operations more than doubled, accordingS&P Capital IQ. The stock is nevertheless down about 19% since its November debut. Mix in the company's long-term goal of growing its footprint from 98 locations as of August 2014 to more than 2,000 nationwide, and you have a chain with the sort of breakout potential that Chipotle had when it joined the Motley Fool Rule Breakers portfolio eight years ago, before it became a ten-bagger.
Dan Caplinger(Hanesbrands):It's hard to believe that a company selling underwear could outperform the red-hot performance of Chipotle, butHanesbrands has knocked its stock out of the park over the past year, posting gains of 75% and more than tripling since early 2013. After being part of theSara Leeempire, Hanesbrands got spun off in 2006, and the underwear-maker has taken advantage of favorable trends in the industry ever since.
In particular, Hanesbrands has done two things to spur its growth. First, it has found itself at the epicenter of the activewear revolution, adapting its core products to cater more toward customers who want clothing that can stand up to the rigors of athletic activity. Despite not having the sports reputation of some specialists in active apparel, Hanesbrands has nevertheless made a huge impression in the space.
Also, Hanesbrands has made smart strategic acquisitions to grow its business. Buyouts of Maidenform, DBApparel, and GearCo have all expanded Hanesbrands' scope and broadened its appeal to customers across the spectrum. With a wide assortment of products for men and women alike, Hanesbrands has done a great job of producing huge growth, and at least for now, the company has plenty of potential to keep moving forward and make an even bigger impression on the activewear segment.
(Starbucks): You can't talk about stocks that are growing faster Chipotle without mentioning Starbucks. Shares of the java giant gained nearly 30% last year, compared to just an 11% gain in Chipotle's stock over the same period. What's more, Starbucks is branching outside of its core coffee business and creating new growth opportunities in both food and tea.
The company is already seeing an uptick in revenue from sales of tea beverages in its stores, and management is confident that it could double tea revenue to roughly $2 billion over the next five years. Food is also driving sales growth for Starbucks thanks to the integration of La Boulange, which the company acquired in 2012. Moreover, fresh food offerings are helping Starbucks attract customers to its stores not only at breakfast but also during other day parts such as lunch.
During the first-quarter of this year, sales of the Starbucks' lunch offerings were up 15% over fiscal 2014. If Starbucks can continue to attract customers for lunch it could take market share from fast-casual restaurant chains such as Panera. For these reasons, I believe Starbucks has a long runway of growth left ahead of it, despite the stock's wild run thus far. Not to mention, with the stock currently trading around $93 a pop today, it offers a more palatable entry price for individual investors versus Chipotle's stock price of $660.
The article 3 Stocks Growing Faster Than Chipotle originally appeared on Fool.com.
Dan Caplinger owns shares of Starbucks. Tamara Rutter owns shares of Panera Bread and Starbucks. Tim Beyers owns shares of Chipotle Mexican Grill. The Motley Fool recommends Chipotle Mexican Grill, Panera Bread, and Starbucks. The Motley Fool owns shares of Chipotle Mexican Grill, Panera Bread, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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