More money is lost in the stock market by trying to predict when a decline will occur than in the actual fall. So trying to time the market is a losing game. The best approach is therefore to invest money at regular intervals and for the long term in order to profit from fluctuations in stock prices.
But there should always be companies on your watch list that you are willing to buy if the prices get more attractive. The three actions below should prove exceptional additions to your portfolio if they take a dip.
1. Mexican Grill Chipotle
As a leader in the fast and casual restaurant movement, Mexican Grill Chipotle (NYSE: CMG) was a big winner. Comparable store sales in the most recent quarter were up 31.2% year-over-year, and the restaurant-level margin of 24.5% was the highest in nearly six years.
The company relied heavily on its digital capabilities during the pandemic, which is still working well today. Digital revenue, which includes orders from Chipotle’s website, mobile app and third-party delivery services, accounted for 48.5% of total revenue for the quarter. And of the 56 new restaurants opened in the second quarter, 45 were equipped with a drive-thru lane, also known as Chipotlane. The ability to serve hungry customers in the way that works best for them has served the business extremely well and will continue to do so in the future.
CEO Brian Niccol is very optimistic. “We remain confident in our key growth strategies and believe that over the longer term they will allow us to have 6,000 restaurants in North America,” he said on a recent earnings conference call. . The company currently operates 2,853 stores, which represents a significant opportunity in the years to come.
The stock is trading at a forward price / earnings ratio of 72, which in my opinion gives investors no margin of safety even when considering management’s long-term growth prospects. Keep an eye on Chipotle stocks and wait for a significant pullback.
2. The common company.
With a total of 633 clinics nationwide as of June 30, The joint company (NASDAQ: JYNT) disrupts the chiropractic industry by providing a user-friendly and cost-effective approach to treating back pain. In 2020, the company treated 1.1 million unique patients who didn’t need insurance, didn’t need to book an appointment, and paid an average of $ 29 per visit. This innovative business model is working as sales jumped 64% year over year in the second quarter.
It is estimated that $ 90 billion is spent each year by people trying to solve back pain problems. The only problem, however, is that 50% of Americans don’t even know what the word “chiropractic” means. The Joint Corp. seeks to address this serious market gap by attracting newly graduated chiropractors seeking employment and entrepreneurial franchisees seeking an attractive investment opportunity. During the second quarter, a record 63 franchise licenses were sold, and there are now 282 active clinics in development.
Management believes the United States has the potential for 1,800 locations, three times its current level. The national chiropractic industry is highly fragmented and dominated by independent bureaus, with chains accounting for only 3% of the total market. This gives the Joint Corp. a long track of expansion.
After nearly six-fold in the past 12 months, shares of The Joint Corp. 18 times forward sales. So, for now, investors would probably do well to wait until a better time to embark on this promising venture.
FinTech favorite Square (NYSE: SQ) operates a lucrative double-sided platform made up of 40 million active Cash App users and millions of merchants in its ecosystem. Each business segment increased its gross margin by more than 85% in the second quarter, and Square processed a massive gross payment volume (GPV) of $ 42.8 billion.
Square allows Cash App customers to set up direct deposits, send money to friends, spend their balances, and even invest in stocks or Bitcoin. And on the seller side, traders can use a full suite of software, hardware, and financial services to help run their small businesses. As the business becomes more important to its customers over time with the introduction of new features, it is very unlikely that users will switch to a new service.
Additionally, the business benefits from a “network effect” where the more consumers use the app, the more sellers want to use it too – and vice versa. And all of this helps propel the company into the burgeoning fintech space.
Square’s recent acquisition of the “buy now, pay later” leader After payment only strengthens the bond between the two parties. Afterpay users can purchase items now and refund them over time. Square plans to integrate Australia’s 16.2 million fintech consumers and 98,000 merchants on its platform, adding another useful payment option to boost GPV growth.
Even if Square’s stock is down recently, a larger drop from here would make buying stocks a no-brainer for investors. This is a thriving business with significant benefits, and you shouldn’t hesitate to consider picking up stocks when the opportunity arises.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.