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Can Chipotle Stock Survive Another Market Crash?

By Neil Patel – Updated Aug 7, 2020 at 2:35PM

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This leading fast-casual chain has proved its resiliency.

Chipotle Mexican Grill (CMG 0.82%) has been one of the few winners during the coronavirus pandemic. Its stock has soared 153% since bottoming on March 18, resulting in a 37% gain year to date. The S&P 500, on the other hand, is up just 2% this year.

While no one welcomes volatility, there are some important factors to keep in mind if another market crash happens. Chipotle investors need not worry, as the company is poised to do well in any environment.

Chipotle's success during the pandemic was boosted by digital sales. In the most recent quarter (Q2 2020), digital sales more than tripled from the prior-year period, reaching a quarterly record of $829 million.

stock market chart crash

Image source: Getty Images.

Of the 37 new restaurants opened during the quarter, 21 included a Chipotlane drive-thru, enhancing customer convenience at a time when it's needed the most. Comparable-restaurant sales were negative in April and May, but have since turned positive and continue trending higher.

Although the company declined to provide fiscal 2020 guidance, CEO Brian Niccol said, "I'm confident we will finish 2020 with good momentum and be well positioned for the long run."

As of June 30, Chipotle had $935 million in liquidity with no debt on the balance sheet. Should another market crash happen similar to what we saw from mid-February to mid-March, investors shouldn't hesitate to load up on shares.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

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