Traders on Chipotle and Smucker as two stock picks


Wall Street is hungry for earnings as a buffet of analyst calls hits the food industry this week.

Argus Research improved Wendy’s on new menu items and focused on digital, UBS became bullish on Chipotle on rising earnings and long-term growth prospects, and Deutsche Bank called JM Smucker good short-term purchase due to recent management reshuffle. .

Speaking to CNBC’s “Trading Nation” on Thursday, Michael Binger, president of Gradient Investments, said Wendy’s and Chipotle looked good here, but saw Chipotle as the best bet.

“It seems the Chipotle brand never really gets tired of its customer base,” he said.

While the stock is expensive, he likes the company’s high growth rate and expects Chipotle’s average earnings growth of around 25% over the next four years.

“It’s a rarity in this market, so I would fall for Chipotle,” he said. “I think the premium is justified.”

Switching to JM Smucker, Binger is bearish on the core stock.

“It’s more of a mature business, and you don’t expect profit growth, but you expect multiple expansion,” he said. “For me, multiple expansion is a more difficult game.”

Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, is more bullish on the pantry game.

“I think this market is really growth at a reasonable price, and Smuckers has been able to continue to put growth first all last year – it has moved in line with its growth prospects, so it hasn’t. ‘has never been overrated,’ she said in the same interview.

Additionally, the market has seen everything from commodity shortages and supply chain constraints to increased demand, leading to inflationary pressures that can weigh on investors’ portfolios. JM Smucker actually raised its prices in August due to rising commodity prices.

“To some extent, while no one likes inflation, the pricing power for companies is actually healthy for expanding profits,” Sanchez said. “I think there is a balance there. Too much of that will kill the market.” But, “the more they can expand that margin, the more chances you have for multiple expansion.”

Chipotle is down 3% in 2021, while Smucker is up 17%.



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