The stock market continued to rise on Wednesday, giving gains of almost 1% to the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC). Sentiment has turned on a dime since Monday's sell-off, and investors seem more confident than ever that the economic recovery can defy threats like rising inflation and higher incidence of COVID-19 infection. Index Percentage Change Point Change Dow +0.83% +286 S&P 500 +0.82% +36 Nasdaq Composite +0.92% +133
Data source: Yahoo! Finance.
Restaurant stocks turned out to be a hotbed of strength on Wednesday. Chipotle Mexican Grill (NYSE: CMG) heated things up considerably, but newer concepts like Kura Sushi USA (NASDAQ: KRUS) also made waves. Below, we'll look more closely at why both of these stocks are climbing sharply.
Image source: Getty Images.
Shares of Chipotle Mexican Grill finished higher by nearly 12% on Wednesday. That was easily enough to take the Mexican food specialist to a new all-time record high, as shares have jumped 33% just since the beginning of 2021.
Chipotle's gains came after strong second-quarter earnings results. The fast-casual chain saw revenue soar 39% from the year-ago quarter, as comparable restaurant sales climbed 31.2%. Chipotle's earnings performance was even more impressive, with adjusted figures of $7.46 per share representing a more than 18-fold jump year over year.
Even with the reopening underway, Chipotle kept making progress with its e-commerce initiatives. Digital sales grew more than 10% from year-ago levels, with more customers taking advantage of the company's "Chipotlane" dedicated pre-order drive-thru service.
Looking ahead, Chipotle expects full-year comparable restaurant sales growth in the low to mid-double-digit percentage range, with 200 or more new restaurant openings. Restaurants are coming back, and Chipotle looks like it's poised to get back to its winning ways.
Nothing raw about this stock
Elsewhere, shares of Kura Sushi picked up 6% in the regular session, and added another 6% after hours. The sushi chain has exploded onto the scene this month, soaring almost 50% just since early last week.
Today's move higher came amid news that a secondary offering of stock from Kura Sushi had gone well. The company said early this morning that it sold 1.1 million shares of stock for $45 per share. That was about 6% below where the stock had closed Tuesday afternoon, but investors nevertheless seemed pleased that the appetite for the offering was as large as it turned out to be.
Like Chipotle, Kura Sushi has seen a nice comeback from shutdown-induced weakness last year. In its most recent quarterly results, Kura Sushi saw sales jump more than sixfold year over year, and adjusted losses narrowed substantially from year-earlier levels. CEO Hajime Uba was optimistic about Kura Sushi's being able to sustain its momentum into next year.
Many patrons are happy to be returning to restaurants after having gone through a year of carryout and food delivery, and restaurant locations are glad to have them back. If those favorable trends continue, it could lead to further gains for Chipotle and Kura Sushi.
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