One Wall Street analyst believes Chipotle stock still has significant upside. Is it worth buying before the stock splits?

Chipotle Mexican Grill (New York Stock Exchange: CMG)The restaurant has gained a reputation for its fresh Mexican cuisine. The restaurant chain focuses on local sourcing, using organic products whenever possible. This strategy has resulted in a strong return of nearly $4,00% over the past decade, with growth of $68% last year alone.

One Wall Street analyst sees more gains ahead.

Tempting Investments

BTIG's Peter Saleh raised his price target on Chipotle from $2,750 to $3,250 per share while maintaining a Buy rating. As of Monday's close, the new price target represented a potential increase of 13%. Saleh was impressed with Gunn's improved throughput and said seasonal demand and higher prices in California helped boost comparable sales.

Wall Street has been scrambling to keep up with Chipotle since it announced a 50-for-1 stock split, one of the largest stock splits in the history of the New York Stock Exchange. Since its initial public offering in early 2006, the company's stock price has risen 13000%.

Sales for Innovation

Saleh's logic was sound. The company built Chipotlane vending machines to process digital orders, which boosted margins and sales at the same time. Not only did this increase throughput, but it also increased the frequency of purchases by Chipotle's 36 million Rewards members.

There are other potential drivers as well, as Chipotle recently announced the limited-time launch of a fan-favorite menu item, chicken al pastor. Combined with strong seasonal demand in the spring, these moves will help Chipotle maintain its winning streak. Last year, the company's revenues grew by $14.3% and earnings per share jumped by $38.4%, while the company's comparable sales were up a whopping $7.9%.

Chipotle is currently trading at a P/E of 65x, which compares favorably withStandard & Poor's 500 Chipotle is trading at a significant premium to the P/E ratio of 24x for the index. However, given the company's track record, this is not an unreasonable price for Chipotle's growing profitability and market performance.

Should you invest $1,000 in Chipotle Mexican Grill now?

Please consider the following before purchasing shares of Chipotle Mexican Grill, Inc:

Motley Fool Stock AdvisorA team of analysts has just named what they think is the best name for investors to buy right now.10Only ...... and Chipotle Mexican Grill were not included. The 10 stocks that made the list could generate huge returns in the coming years.

Stock AdvisorIt provides investors with an easy-to-learn blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. Since 2002, StockAdvisorThe service has more than doubled the return on the S&P 500 Index.

View these 10 stocks

*Stock Advisor's Circular as of April 1, 2024

Danny Vena owns shares of Chipotle Mexican Grill. the Motley Fool holds a recommendation for Chipotle Mexican Grill. the Motley Fool has a disclosure policy.

One Wall Street analyst thinks Chipotle stock still has a lot of upside. Is It Worth Buying Before the Stock Splits? This post was originally published by The Motley Fool.