Last week, I had the good fortune to join Barry Armstrong on his radio show Financial Exchange on WRKO AM 680 in Boston. Every so often, we get to talk stocks for a few minutes, and I gave him and his listeners two stock ideas that I think are worthy of your watchlist today. You can listen to our segment by clicking here. And you can read more about my choices below.
Chipotle Mexican Grill (NYSE:CMG)
One of the big topics regarding Chipotle lately has been the phenomenal comp numbers it continues to put up. For its most recent quarter, Chipotle reported comps of 13.4% -- its highest in nearly eight years. Co-CEO Monty Moran stated that the single biggest driver of Chipotle's comps today boils down to the concept itself: a great food culture coupled with a great people culture. In addition, catering and successful local advertising campaigns have also added about a percentage point each to the company's overall performance.
Throughput continues to be a source of pride for Chipotle. Management's four pillars to throughput continue to serve as a beacon, but management is always questioning how they can get better. Chipotle's highest throughput restaurants work 350 transactions per hour through the line during lunch. The average throughput overall though is less than half of that. Management sees this as an opportunity and will continue to try to capitalize on its model of efficiency.
When it comes to what kids want versus what they need, well, clothing is certainly a need. And this is right up Carter's alley, as it has brands such as its namesake Carter's as well as OshKosh. As the U.S. population continues to grow, so too will the population of children, which will serve Carter's well. The beauty of Carter's versus other specialty retailers is that with the parents buying the clothes, Carter's doesn't have exposure to fashion risk like, say, teen retailers, for example.
Carter's has more than 17,000 wholesale points of distribution today with partners like Target and Costco, among others. But even better news for investors (and parents) is Carter's growing direct-to-consumer retail part of the business. With more than 650 of its own stores in the U.S., more than 100 in Canada, and a growing e-commerce segment, Carter's is not only poised for growth, but for more profitability as well.
Here's what to do next
Of course, these are just ideas, and I can't recommend strongly enough that you do your own due diligence to determine whether or not either of these ideas fit into your overall investing strategy. But both companies have market opportunities set to grow in the coming years, which is great for investors. You may just want to consider digging in a little deeper.
Jason Moser owns shares of Chipotle Mexican Grill. The Motley Fool recommends Carter's, Chipotle Mexican Grill, and Costco Wholesale. The Motley Fool owns shares of Chipotle Mexican Grill and Costco Wholesale. 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.