These 2 stocks will probably be the big winners on Wednesday


Markets continued to rebound from their sharp decline in January as investors managed to shrug off some of the worries that have been plaguing them recently. Interest rates continued to rise, with the 10-year Treasury yield approaching 2%. However, the bond market concerns did not spill over to the stock market, and even the strong growth Nasdaq Compound (NASDAQ INDEX: ^IXIC) managed to drive up the other stock indexes. Earnings for the Dow Jones Industrial Average (DJINDICES: ^ DJI) and the S&P500 (SNP INDEX: ^GSPC) were more modest but still considerable.


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Data source: Yahoo! Finance.

Investors received even more good news after the closing bell as favorable earnings reports from two industry giants helped generate more excitement for the stock market. Restaurant chain Chipotle Mexican Grill (NYSE: CMG) and solar energy specialist Enphase Energy (NASDAQ: ENPH) have very different businesses, but what they both shared was a rosy outlook for the future that investors liked to see. Let’s take a closer look at both releases to see what the two companies have to say.

1. Chipotle looks spicier than ever

Shares of Chipotle Mexican Grill were up just half a percent in Tuesday’s regular trading session. However, after the Mexican food specialist announced its latest quarterly results, the stock jumped more than 6% in after-hours trading just before 6 p.m. EST.

Image source: Getty Images.

Chipotle’s fourth quarter results were superb. Revenue rose 22% on a 15.2% rise in comparable restaurant sales, with digital sales holding up reasonably well, even as reopening trends continued toward more normal conditions. Despite cost issues, operating margin topped the 20% mark and adjusted earnings of $5.58 per share were up 60% year-over-year.

The news for the whole of 2021 was just as good. Sales climbed 26% as components rose 19.3% and adjusted earnings soared 137% to $25.42 per share. Chipotle opened 215 new restaurants in the past year, including 78 in the past three months alone.

Still, this is just the beginning for Chipotle. The company revealed a long-term strategy that calls for at least 7,000 restaurants in North America alone. In addition, efforts to accelerate development should result in between 235 and 250 new restaurants in 2022, with continued strength in the compositions in the first quarter.

Going into the report, Chipotle’s stock remained about 25% below its record highs of last summer. With renewed momentum, however, investors look set to see another wave of growth from the Mexican restaurant chain this year and beyond.

2. Enphase lights up

An even bigger gain, however, went to Enphase Energ y. Shares of the solar micro-inverter and monitoring system specialist rose nearly 3% in the regular trading session, then climbed nearly 16% after hours.

Enphase’s fourth quarter financial results were quite strong. Revenue hit a record $413 million, up 56% from year-ago levels. Net income rose 44% year-over-year to surpass the $100 million mark, and adjusted earnings of $0.73 per share were well above the $0.51 per share figure of last year. The period ended a breakthrough year for Enphase, with sales up 79% and adjusted earnings of $2.41 per share.

Enphase had a memorable quarter from a business perspective. It has started shipping its IQ8 microinverters, which are capable of forming a microgrid even in the event of a power outage. Additionally, the acquisition of ClipperCreek will add electric vehicle charging solutions to Enphase’s home energy management product line.

Enphase sees battery shipments playing a huge role in sending first-quarter revenue into an expected range of $420-440 million. That’s the kind of growth investors want to see, and it could push Enphase shares even higher throughout 2022 if it continues.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.


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