Why Warren Buffett Would Love Chipotle
Warren Buffett, arguably the greatest investor of all time, advocates following timeless principles for stock market success. Probably the single most important characteristic he looks for in a potential investment is a competitive advantage, or moat.
Chipotle Mexican Grill (NYSE: CMG) fits the bill here, as it has created and dominated an entirely new segment of the restaurant industry. The fast-casual chain has found remarkable success because of its brand recognition, customer value proposition, and pricing power, all of which support the company's competitive advantage.
As a result, the stock has been a real moneymaker, soaring nearly eightfold over the past decade. Even with the novel coronavirus negatively impacting 2020 thus far, Chipotle stock is still up over 35% year to date. Berkshire Hathaway, the conglomerate headed by Buffett, is currently sitting on a $137 billion cash pile (as of March 31). Although he has claimed he doesn't eat Mexican food, Buffett's familiarity with the restaurant industry, his massive cash position, and the attractiveness of the business are all the necessary ingredients for why I think he'd love Chipotle.
Source Fool.com
