Key Points
- Tractor Supply Company commands the rural marketplace and is still growing after years of record-setting results.
- Jack in the Box is expanding its operating arena, deepening the penetration of existing markets, and widening margins.
- Chipotle Mexican Grill is the hottest CEO-led turnaround story on the market and is setting new highs; the business could double in size twice over the next decade.
- 5 stocks we like better than Chipotle Mexican Grill
The CEO is the most important person in a company. The CEO alone is responsible for knowing the inside and outside of the business, the market dynamics, operations, and strategy. The CEO is responsible for interpreting news and events and guiding strategy. They are responsible for the money, spending and making it, and are the outward face of the business, reporting only to the board.
It is significant when the CEO of a company changes, specifically if a company’s business is stagnant, ailing, or on the rocks. A new CEO can breathe life into an old business and drive shareholder value. This is a look at three CEO-led turnarounds still in their early innings that investors can buy into.
Tractor Supply Company: Life Out Here is Good
(As of 05/6/2024 ET)
- 52-Week Range
- $185.00
▼
$279.38
- Dividend Yield
- 1.63%
- P/E Ratio
- 26.25
- Price Target
- $253.54
Hal Lawton took the helm of Tractor Supply Company NASDAQ: TSCO in January 2020, just months before the COVID-19 pandemic gripped the world. His experience before joining the Tractor Supply Team includes fifteen years in key roles at retail leaders Home Depot NYSE: HD, eBay NASDAQ: EBAY, and Macy’s NYSE: M, which provided the perfect background to leverage this business to record growth. Pillars of his strategy include the Life Out Here campaign, a lean into eCommerce, and improved merchandising and customer experience.
The result is four years of sustained growth. Growth surged to record levels during the pandemic, setting records for revenue and earnings for twelve consecutive quarters. Revenue and earnings growth persists despite slowing into the single-digit range. Among the salient details for investors is the outlook for sustained single-digit growth and the dividend. The analysts forecast top and bottom-line growth to continue in 2025 and for dividend increases to continue.
The 1.6% dividend yield is reliable, and the distribution is growing. The payout ratio is low at 40% and backed up by a fortress balance sheet. Highlights from Q1 2024 include increased cash and assets, long-term leverage at 0.8X equity, and equity up 10% YOY. The company also makes meaningful share repurchases, reducing the count by a 2% average for the quarter.
Jack in the Box Winds Up For Major Expansion
(As of 05/6/2024 ET)
- 52-Week Range
- $53.71
▼
$99.56
- Dividend Yield
- 3.21%
- P/E Ratio
- 9.65
- Price Target
- $86.67
Jack in the Box NASDAQ: JACK CEO Darin Harris took the helm in June 2020 during the pandemic’s peak. His goal was to rationalize the business, aligning the needs and strategy of a diverse chain of company-owned and franchised locations. Beyond that, the mission was to expand into new territories, deepen penetration, and improve operating metrics with the customer in mind. His plans included digitization, aiding results, and the outlook remains robust.
The company is experiencing headwinds in 2024 related to tough comps and re-franchising efforts in the Del Taco segment. However, margins are improving, the Jack in the Box store count is growing, and the outlook is robust. Analysts forecast significant margin expansion over the next eighteen months despite sluggish sales, and the revenue forecast is cautious. The company has signed agreements for 358 new Jack in the Box stores, which is good for a store count increase of 18% over the next two to three years. JACK shares pay a reliable dividend worth 3% at current price points, and the company repurchases shares.
Chipotle Mexican Grill is the Hottest CEO-Led Growth Story
(As of 05/6/2024 ET)
- 52-Week Range
- $1,768.64
▼
$3,241.42
- P/E Ratio
- 68.22
- Price Target
- $3,137.12
Chipotle Mexican Grill NYSE: CMG CEO Brian Niccol took control in March 2020 and stormed the market. His lean into quality, operations, and eCommerce resulted in record-setting growth and results that have yet to cease. The company is on track to double its North American footprint from current levels and expand internationally, which could double the business again.
Among the highlights of his strategy are digital access and Chipotlanes, which can only be used with the online app. Chipotlances improve store results via increased traffic, comp store growth, and wider margins. They are the pillar of the growth strategy and are included in most new builds and remodels. Analysts liked what they saw in the latest report and are leading this market higher. Marketbeat.com tracks two dozen updates since the release, and all but one include a price target increase. Most updates include a target above the consensus; consensus is up 25% since the report.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Chipotle Mexican Grill wasn’t on the list.
While Chipotle Mexican Grill currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
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