As they do every year, the major Wall Street firms we cover here at 24/7 Wall St. come out with a list of stocks that they feel will be the top performers for the coming year. Last year was a veritable train wreck compared to most years, with everything from the pandemic that crippled the economy on and off and killed hundreds of thousands to a roller-coaster stock market that dropped 35% in less than a month and has since rallied to all-time highs. Nonetheless, the analysts across Wall Street are doing their jobs, and the top picks are still coming out fast.
With many across Wall Street concerned that valuations are very stretched, it makes sense for investors to consider thinning the momentum herd in portfolios and perhaps looking for growth ideas that are less crowded. In fact, many analysts are suggesting broad sector rotation, and a new Goldman Sachs report is very positive on a group that struggled mightily during 2021.
Goldman Sachs initiated coverage on the restaurant segment and is very positive for this year. The firm noted that the industry lost a staggering $150 billion in 2020, and analysts expect that market shares of the large chains will increase by 5% to 25% in 2021. They start coverage on 10 of the top restaurant stocks, and here we focus on four with the biggest upside potential. While these stocks are rated Buy, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Chipotle Mexican Grill
The company remains a favorite destination for those looking to eat out, and its stock is a member of the Goldman Sachs Conviction List of top picks. Chipotle Mexican Grill Inc. (NYSE: CMG) operates more than 2,400 fast-casual Mexican restaurants offering freshly made burritos, tacos, burrito bowls and salads.
It is 100% company operated and runs average unit volumes much higher than peers. Goldman Sachs is very positive and the report noted this:
Chipotle established a strong foundation with a focus on operations, supply chain, and marketing over the last 2 years. The digital transformation brought about by COVID will allow Chipotle to leverage its digital ecosystem — strong mobile app, rapidly growing loyalty program (~20 million members in just 2 years), 3rd party delivery, and Chipotlane digital drive-thru’s — to drive top-line growth and improving margins.
The Goldman Sachs price target for Chipotle Mexican Grill stock is $1,650. That compares with a Wall Street consensus target of $1461.31 and a Wednesday closing price of $1480.62 per share.