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Jim Cramer says Chipotle shares are on the verge of a breakout: ‘This one’s ready’

CNBC’s Jim Cramer said Wednesday that he is bullish on Chipotle, predicting that the stock is poised to break to the upside.

“This one’s ready. Chipotle’s already rallied hard off its lows, but after five months of mostly trading sideways, it’s a coiled spring,” the “Mad Money” host said.

Shares of the fast-casual restaurant chain last closed at $1,550.34, and have climbed more than 18% in the past six weeks to finish the first half of 2021 within reach of the highs.

The stock lost momentum after a big run last year, but Cramer predicts it will pick up steam again in the second half of 2021.

“If the stock can climb another 20 or 30 points from here, I’m betting that that triggers a massive breakout and people will ‘buy, buy, buy’ the stock of Chipotle,” Cramer said. “I bet CEO Brian Niccol has no problem trumping the Street’s forecasts. He’s just that good.”

Analysts are expecting that Chipotle could produce earnings of $24 per share this year, more than double the $10.73 per share made in 2020, according to Factset data. The stock at Wednesday’s close was trading at a price-to-earnings multiple of 63.

Cramer dismissed what he considered to be a high stock valuation, speculating that the company will continue its habit of performing better than current expectations, making the stock more attractive at current levels.

“While the stock’s far from cheap … Chipotle has a habit of looking a lot cheaper in retrospect because the estimates keep climbing,” Cramer said.

“The company keeps putting up excellent numbers, and I think the worries about food price inflation and labor costs — those are what hurt the stock —  are now, by this point, baked into it,” he said.

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