Robots continue their foray into the kitchen. Now Chipotle Mexican Grill looks to spice — and speed — things up with Autocado. The burrito king is also setting the table for Q2 earnings on July 26 as CMG stock joins the IBD Leaderboard watchlist and taste-tests a new buy zone.
Chipotle has just unveiled Autocado, a collaborative robot prototype. Developed with Vebu, a food industry product development firm, Autocado cuts, cores and peels avocados before they are hand-mashed to create the restaurant's signature guacamole. With the device, Vebu aims to ultimately reduce guacamole prep time by 50%.
The "apeel" to Chipotle is obvious. In restaurants across the U.S., Canada and Europe this year, Chipotle is expected to use roughly 4.5 million cases of avocados, equivalent to more than 100 million pounds of fruit.
In support of Chipotle's sustainability initiatives and waste-reduction efforts, Autocado also aims to increase avocado fruit yield through precision processing. The robotic innovation could lead to millions of dollars in annual food cost savings if successfully developed and deployed widely.
See Who Joins CMG Stock On The Earnings Calendar
Chipotle Mexican Grill Sets Table For Growth
Scoring the highest-possible 99 Composite Rating, Chipotle Mexican Grill leads all its peers in the restaurants group. The industry ranks No. 25 among the 197 groups IBD tracks.
Last quarter, the company grilled up revenue growth of $2.37 billion, a year-over-year gain of 17%.
Bottom-line growth also rose. Chipotle posted earnings of $10.50 per share. That prior-year gain of 84% marked a fourth straight quarter of accelerating EPS growth. Wall Street has bumped up its forecast a touch. It predicts earnings to grow 35% this year to $44.41 a share and 21% to $53.58 in 2024.
Leading money managers have shown a hankering for CMG stock, landing it on this month's list of new buys by the best mutual funds. Texas-based Steak 'n Shake parent Bilgari also found a seat at this exclusive table.
CMG Stock Finding Support For Another Breakout
After reporting Q1 earnings on April 25, Chipotle Mexican Grill gapped up to a one-day gain of nearly 13%. Volume was massive — 469% higher than normal. In a clear sign of strength, CMG stock has since held the bulk of those gains, refusing to retreat and "fill the gap."
With earnings due next week, the stock continues to hold support around and above both its 21-day exponential moving average and its 50-day line.
CMG stock is now looking to take a bite of a 2,139.88 buy point in a second-stage flat base. Volume has been relatively tepid within the current pattern, with several weeks of tight, healthy trading. Such action could mean Chipotle Mexican Grill is coiled up to spring sharply higher.
All that turns, of course, on how the company reports next week. See if the market can continue its strong uptrend as Q2 earnings roll in. And look for Chipotle Mexican Grill to ride the demand among top funds into a fresh buy zone in heavy volume.
CMG stock rose over 3% Monday to close near the top of the day's price range and just shy of the the buy point it had briefly cleared on June 30.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
