Buy alert: Chipotle shares on the rise after massive 50:1 split

Investors seeking long-term compound interest should consider: Chipotle Mexican Grill (NYSE:CMG). Following the company’s recent 50-for-1 stock split, Chipotle shares appear to be a buy.

The restaurant chain, which specializes in Mexican cuisine and is known for its fresh ingredients, has just carried out the first stock split in its history and this move has made the shares cheaper than they have been in over a decade.

Before the split, CMG stock cost more than $3,200. Now, investors can buy shares for $61 apiece, providing an opportunity to take a position in a leading growth stock that has an impressive track record of delivering returns for shareholders.

Chipotle stock split

Chipotle’s 50-for-1 stock split, which took place on June 26, was one of the largest in the history of the New York Stock Exchange. While the split did not change the fundamentals or underlying value of Chipotle stock, it did make the shares more accessible to retail investors.

Since the stock split, Chipotle stock has fallen 7% as some investors used the split as an opportunity to sell shares and take profits, but the recent decline is another reason to buy the stock.

Chipotle stock has been a long-term winner for shareholders. Since its IPO in 2006, CMG stock has risen over 7,200%, pushing its pre-split price above $3,000.

Over the past 12 months, the stock has risen 45%. The steady growth is the result of strong financial results and consistent expansion of the company’s restaurants over the years.

While some analysts complain that Chipotle stock is trading at a high 65 times earnings, this reflects the company’s success.

Strong returns

Chipotle Mexican Grill’s exceptional first quarter financial results and optimistic future outlook were exactly what one could expect from the company.

Chipotle, based in Newport Beach, California, reported first-quarter earnings per share of $13.37, compared to the $11.68 Wall Street had forecast.

Revenue for the period was $2.70 billion, compared to $2.68 billion as widely expected by analysts. Revenue increased 14 percent year over year.

Chipotle said store sales rose 7%, beating estimates of 5.2% growth. Despite higher menu prices, the company saw an increase in customer traffic.

The company has also worked to produce its food faster, improving the industry’s throughput metric. Management said Chipotle’s throughput in the first quarter was its highest in four years.

Continuous growth

In addition, the restaurant chain continues to grow, adding 47 new locations during the quarter, bringing it ever closer to its goal of doubling its total number of restaurants to 7,000.

In terms of forecast, Chipotle said it expects sales growth at existing stores in the mid- to high-single-digit percentage range and reiterated its forecast of 285 to 315 new store openings this year.

There has been a recent backlash against Chipotle online over allegations that the company has reduced its food portion sizes, but these allegations do not appear to have had any significant impact. The portion debate has no bearing on Chipotle’s long-term growth potential.

Buy Chipotle shares

For nearly 20 years, Chipotle has been one of the best stocks investors can own. Not only is Chipotle one of the best restaurant stocks, but it has also proven to be one of the best growth stocks investors can hold in their portfolio.

Chipotle is well managed and remains focused on growth. The company continues to beat Wall Street expectations. The recent 50:1 stock split has made the shares more affordable and within reach of most investors.

People should take advantage of the opportunity and buy Chipotle shares.

As of the publication date, Joel Baglole had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.