Today we’ve got a quickie for you, in response to a couple questions about the Cabot Top Ten Trader teaser pitch that came out over the weekend.
Top Ten Trader ($137/year) is a short-term newsletter edited by Mike Cintolo, he basically sifts out ten of their favorite growth stocks each week, and I think they’re typically just culled from the other Cabot newsletters (thought that may have changed by now). Cabot itself is generally a momentum growth shop, so you could think of this as a “best of” newsletter of theirs — I have no idea what the trading performance is like (they say, of course, that it’s fantastic — and I would imagine the past few years of wild momentum growth stocks have been good for them).
So what is it they’re hinting at now to lure subscribers? Here’s how Cintolo frames it:
“Each week I use a proprietary stock picking system to select 10 stocks identified as having strong growth potential.
“Of those, I select one as the top pick. The one to buy if you’re buying only one….
“My most recent top pick has had a powerful story of success before hitting some headwinds. It is now back on track thanks to some smart moves from management.”
OK, so what’s the stock? Here are our clues:
“The company, in the retail food service industry, has a large and growing store base. And those stores are domestic which insulates the company from foreign trade issues.”
And my favorite clues, some numbers…
“Q3 saw revenue accelerate to 9% and same-store sales grew 4.4%.
“That growth was driven in part by a 48% explosion in digital sales, accounting for more than 11% of corporate revenue.
“Better yet, earnings boomed a whooping 62% thanks to greatly improved margins – a trend that is likely to continue into 2019….
“Earnings per share doubled in 2017, increased by 30% in 2018 and is expected to grow by more than 40% in 2019.”
So who is it? This is what Cintolo says…
“Obviously I can’t reveal the name of the company here – part of what makes these good investment opportunities for subscribers is that they’re confidential.”
Well, we have no such qualms… if you’re going to drop lusty hints about great performance in order to get people to pull out their credit card, we’ll happily “reveal” those “secrets”… as long as the Thinkolator can find the info of course.
So can it? I know, I know, silly question… of course! This is good ol’ Chipotle (CMG).
Which I still kick myself for selling 1,000 years ago (OK, maybe it was 10 years ago, back in the good ol’ days when McDonald’s was their biggest investor and they still had multiple share classes).
But anyway, the reason we can keep it short and sweet today is that Chipotle is one of the more over-covered stocks in the media, and it has been doing phenomenally well this year in their “rags to riches to rags” story so you can certainly find enough info to back up whatever opinion you want to have on this stock.
And yes, it’s a perfect match — they did restore same store sales growth last year, and get revenue growing again as they got past the worst of their health and safety scares (at least for now, fingers crossed) and invested heavily in growing their digital sales platform (which, yes, did grow 48% in the third quarter last year… though it has since accelerated further, up 66% when they reported their fourth quarter last month.
Which has sent the stock on a tear, as you might notice — they’re not quite back to their pre-e-coli highs of $750 or so in 2015, but at the devil’s own $666 as I type they’re certainly getting closer.
There’s a free Motley Fool article on the Q4 earnings beat here if you’re curious.
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That surge in the share price has come because of renewed enthusiasm for their growth potential, of cou