Memory Chip Industry Outperforms amid Sector Rotation
"Now, if everybody this morning goes to their Bloomberg terminal and type MRR, I think that stands for member rank returns. going to go to year to date. You look at the S&P 500 index, the best performers since the start of the year. Number one, SanDisk uh up 567%. Western Digital up 291%. And then you have Micron Technology, Seagate Technology. Anyway, you you get the picture. All four of these stocks, John, have to do with data storage and the memory chip industry. So if you maybe could look go all the way back to January this year and decide where to put your money, it wasn't in the MAG7s. It was actually in the memory chip industry. SanDisk, Western Digital, Micron, uh the big memory chip maker, and its competitor Seagate. All the best performing stocks in the S&P 500 for 2025. If you do look at the bottom though, there are some retailers down there, which I think is just showing you that there were some companies that did struggle with tariffs."
The speaker outlines that the memory chip sector, represented by companies such as SanDisk, Western Digital, Micron Technology, and Seagate Technology, has been the standout performer in the S&P 500 year to date, especially looking ahead to 2025. This sector outpaced traditional MAG7 stocks, contrasting with struggling retail companies impacted by tariffs, suggesting a strong sector rotation towards data storage.
Arco Dorado: Blue-Chip Value in Latin America
"The last one is Arco Dorado. That sounds familiar. It's McDonald's Latin American franchiser. This company is growing at mid-sle digits. It's got a really solid dividend. It provides a deep value and a high yield compared to the parent company. So, you kind of get the benefits of owning the blue chip McDonald's, but with the emerging market exposure."
Arco Dorado is presented as a value play that offers blue-chip benefits through its association with McDonald's, while providing emerging market exposure. Despite current margin pressures, catalysts like market share gains and a recovering margin profile in the coming year underpin its potential.
Chipotle: Quality Business Trading Near a 52-Week Low with Long-Term Upside
"Chipotle Mexican Grill. All right. When people hear that a stock like Chipotle is down, they may get nervous. It's something wrong with the business. But here's what I always say. Price and value are two different things. This company isn't just burritos and guacamole – it's one of the most successful fast casual brands in America, now planning to go global with expansion into South Korea, Singapore, and Mexico. They're investing in automation and digital ordering to drive profit margins higher. Even though it's near its 52-week low, the fundamentals remain solid for long-term investors."
The speaker emphasizes that Chipotle remains a strong premium business trading near its 52-week low. He highlights its global expansion, automation initiatives, and digital investments as catalysts that support its long-term intrinsic value. He advises investors to assess the price versus real value rather than reacting to short-term market volatility.
Buy the Dip on Chipotle (CMG)
"Okay, let's start with Chipotle CMG. Now, as you know, Chipotle, or as I like to say, Chipotle is a popular restaurant chain with more than 3,500 locations focused on premium customizable burritos, bowls, and salads. Right now, because their stock is trading at such a discount, in my opinion, it's an unbelievable deal. This pullback is giving long-term investors a rare opportunity, and I'd argue it's very quality growth at a discount. Historically, these dips have been phenomenal long-term entry points. If you're buying the dip on this right now and you're simply holding it for the next few years, you're going to do well."
The speaker expresses a strong bullish view on Chipotle (CMG), describing its current discount as a rare buying opportunity thanks to its expanding digital ordering, new store openings, and international growth. The recommendation is to buy the dip and hold for the next few years, capitalizing on the company's consistent same-store sales and profitability.
Potential Rebound in Chipotle
"Now, another stock that's been beaten down this year is Chipotle. Chipotle has had its struggles, I'll admit, and it's down 50% this year. Unit volume is going down for multiple quarters, which has led to a dramatic shift in sentiment. However, these temporary issues might present a buying opportunity if the company can reverse its deceleration."
A commentary on Chipotle's steep sell-off and operational headwinds, suggesting that a reversal in declining unit volumes could offer a rebound opportunity.
Chipotle Overvalued Despite Brand Strength
"Now, for the 4P trading at 26 times forward earnings that was a company I used to trade at 65 70 times. It was at 35 times two weeks ago. Now trading at 26 times forward earnings and I still believe it's overvalued. I would compare Chipotle to other, you say, companies even Darden Restaurants. For such a business model, I would really not pay much more than 20 times earnings. I think anything above 20 in general is too expensive for a business model like Chipotle."
The speaker critiques Chipotle's current valuation, noting that even though the stock has come down from extremely high multiples, it remains overvalued at 26 times forward earnings. He emphasizes that for Chipotle's business model, a multiple above 20 times earnings is too expensive, comparing it unfavorably to peers like Darden Restaurants.
Long-Term Growth Opportunity in CMG Amid Macro Headwinds
"Chipotle Mexican stock is down 50% but it is a good business and therefore this is getting interesting. I look at what Billman has to say and he is really praising the company. He has been a long-term investor. He says that they will return to growth. Actually we'll see later they are still growing and therefore this might be an interesting opportunity to invest in. So the situation is the following difficult comparables the macro environment is weakening however if you have a long-term growth focus over time that should benefit your investment. If you buy now and then for whatever reason recession, it goes down, you can then double down."
The speaker highlights that despite a 50% drop in Chipotle's stock, the company remains a strong business with promising long-term growth prospects. He underscores potential catalysts such as continued earnings growth, new store openings, and buybacks, while acknowledging current macro and comparable challenges. The commentary suggests a watchful, patient approach with the possibility to double down during market dips.
Chipotle's Inconsistent Portions and a Simple Fix
"Now, we get to our fail of the week. This is the second fail of the week. In this case, it's Chipotle. Chipotle stock is down around 50% on the year. And it's not just the stock price. The company's also struggling. For example, even though Chipotle is opening up more locations and they're seeing some growth that way, the average revenue per location is declining and it's been declining quarter after quarter. One of the major problems with Chipotle is very clear. Anyone that has gone there frequently knows about this issue. It is a fact that going to Chipotle to some degree is a bit of a gamble. You don't really know what you're going to get. It's very inconsistent. All Chipotle needs to do is add the scales. That's it. They add the scales and they figure out one massive problem for the business. Food scales are cheap. They're easy to implement. They're easy to train."
The speaker criticizes Chipotle for its highly inconsistent portion sizes, which frustrates customers and affects revenue reliability. He suggests that implementing a simple solution, such as using food scales at point of service, could resolve the inconsistency and improve the customer experience.
Chipotle faces consumer spending headwinds
"Shares of Chipotle. Chipotle is having a really bad day. To be precise on intraday basis, it's the worst day since 2012. The ticker is CMG. Shares plummeted after the chain cut its outlook for a third time this year. Uh and we're worried about young diners. Uh they pulled back from eating out. Uh and obviously there has been a lot of concern about consumer spending and this is adding up."
Chipotle (CMG) is enduring its worst intraday performance since 2012 after cutting its outlook for the third time this year. Concerns over declining patronage from young diners and weakening consumer spending are driving a significant drop in the stock.
Chipotle's Slump Raises Turnaround Questions
"So, this is a great moment for me, but shares of Chipotle in focus here. Ticker CMG, and they're falling. I mean, dismal performance year, worst day since 2012, falling as much as 22%. This is after the company cut its outlook for the year. They're saying that diners are pulling back from eating out and they're really worried about consumer spending more broadly, but also they attributed rising costs to an increase in beef prices and the impact of new tariffs here."
Chipotle (CMG) is struggling with its worst day since 2012 as shares fall 22% following a downgraded outlook, amidst concerns over consumer spending and rising costs impacting profitability.