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Monday, August 8, 2022

These 2 Stocks Will Probably Be Wednesday’s Big Winners

Markets continued to rebound from their big drop in January, as investors managed to shrug off some of the concerns that have plagued them recently. Interest rates continued to rise, with the 10-year Treasury yield coming closer to 2%. However, bond market concerns didn’t bleed over to the stock market, and even the growth-heavy Nasdaq Composite (NASDAQINDEX:^IXIC) managed to lead other stock benchmarks higher. Gains for the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) were more modest but still considerable.

Index

Daily Percentage Change

Daily Point Change

Dow

+1.06%

+372

S&P 500

+0.84%

+38

Nasdaq

+1.28%

+179

Data source: Yahoo! Finance.

Investors got even more good news after the closing bell, as favorable earnings reports from two industry giants helped stoke more enthusiasm about the stock market. Restaurant chain Chipotle Mexican Grill (NYSE:CMG) and solar power specialist Enphase Energy (NASDAQ:ENPH) have very different businesses, but what they both shared was a rosy outlook for the future that investors liked seeing. Let’s look more closely at both releases to see what the two companies said.

1. Chipotle looks spicier than ever

Shares of Chipotle Mexican Grill were up just half a percent in the regular trading session on Tuesday. However, after the Mexican food specialist announced its latest quarterly results, the stock jumped more than 6% in after-hours trading as of just before 6 p.m. EST.

Image source: Getty Images.

Chipotle’s fourth-quarter results were superb. Revenue rose 22% on a 15.2% rise in comparable restaurant sales, with digital sales holding up reasonably well even as reopening trends continued toward more normal conditions. Despite cost challenges, operating margin rose above the 20% mark, and adjusted earnings of $5.58 per share were up 60% year over year.

The news for the full year in 2021 was just as good. Sales climbed 26% as comps rose 19.3%, and adjusted earnings soared 137% to $25.42 per share. Chipotle opened 215 new restaurants during the past year, including 78 in just the past three months.

Yet this is just the beginning for Chipotle. The company revealed a long-term strategy that sees at least 7,000 restaurants in North America alone. Moreover, efforts to accelerate development should result in between 235 and 250 new restaurants in 2022, with continued strength in comps in the first quarter.

Coming into the report, Chipotle stock remained about 25% below its record levels from last summer. With new momentum, however, investors seem poised to watch a new wave of growth from the Mexican food restaurant chain  this year and well into the future.

2. Enphase powers up

An even bigger gain, though, went to Enphase Energ y. Shares of the solar microinverter and monitoring system specialist were up nearly 3% in the regular trading session and then soared almost 16% higher after hours.

Enphase’s Q4 financial results were quite strong. Revenue hit a record of $413 million, up 56% from year-ago levels. Net income was higher by 44% year over year to top the $100 million mark, and adjusted earnings of $0.73 per share were nicely higher from last year’s $0.51 per share figure. The period closed a breakthrough year for Enphase, with sales vaulting 79% higher and adjusted earnings of $2.41 per share.

Enphase had a momentous quarter from a business standpoint. It started shipping its IQ8 microinverters, which are capable of forming a microgrid even when there’s a power outage. Moreover, the acquisition of ClipperCreek will add electric vehicle charging solutions to Enphase’s mix of home energy management products.

Enphase sees battery shipments playing a huge role in sending Q1 revenue to a projected range of $420 million to $440 million. That’s the kind of growth investors want to see, and it could push Enphase shares still higher throughout 2022 if it continues.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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