First, Chipotle has potential for long-term growth with great visibility. In other words, it’s easy to see where Chipotle’s future growth might come from, such as management’s forecast for strong same-store sales and plans to open up to 165 new locations this year.
Second, the fast food business is big enough to support Chipotle’s growth forecast.
Third, Cramer thinks Chipotle will remain competitive because it practically invented the “healthy eating” concept, at least in the fast food world.
Fourth, Chipotle doesn’t currently offer a dividend, but Cramer said management will likely continue to invest in the business, which should ultimately create value for shareholders.
Fifth, the restaurant chain is expanding internationally with plans underway in Europe.
Sixth, Cramer said Chipotle has a very strong balance sheet, which will support the growth we’re looking for.
Seventh, Chipotle currently sells for 38 times next year's earnings estimates, which might sound expensive, but given the company has a 22 percent long-term growth rate, it means Chipotle has a PEG ratio of 1.72. To Cramer, that’s totally reasonable for such a “high quality business.”
Eighth, Cramer said the company’s management team, including and especially CEO Steve Ells, is more than capable of executing the growth plan.Page 2 of 3 | Prev Page | Next Page