With $60K for a long-term investment—is Netflix or Chipotle a better buy?

There is no better vehicle for creating wealth than investing in stocks. Stocks are even better than gold, bonds, and real estate. The long-term results prove that if you want to accumulate large amounts of wealth, investing in stocks is the way to go, even if over shorter periods one asset class or another outperforms stocks.

It’s clear that for investors wanting the best chance of having a comfortable retirement, investing in stocks and adopting a buy-and-hold strategy for the long haul is the correct one. That’s why the investing adage, “it’s not about timing the market, but your time in the market,” holds true.

So if you have $60,000 that you want to put into the market today, and plan to hold for at least three to five years (though decades is better), choosing between Netflix (NASDAQ:NFLX) and Chipotle Mexican Grill (NYSE:CMG) is a difficult decision.

Both stocks have been incredible investments returning almost 25,000% and 6,500%, respectively, over the past 20 years. Either company would have made you very wealthy. But which stock is the best investment for the next 20 years?

Netflix (NFLX)

Video streaming giant Netflix has emerged victorious from the streaming service wars. Having dominated the market for years, Netflix suddenly faced a barrage of competition during the pandemic as movie studios sought to leverage their IPs and launch their own streaming services.

Yet the studios quickly found out Netflix made streaming profitably look easy. In fact, it is quite difficult. Although the industry leader’s stock was hurt as studios cut off access to much of their content, Netflix invested tens of billions of dollars in original content and ultimately won over billions of viewers. 

Despite its rivals seemingly having all the advantages, they couldn’t compete. Not even Disney (NYSE:DIS), with an enviable, deep catalog of beloved titles, has been able to turn a profit at Disney+. Only by including its ESPN and Hulu channels can Disney say it makes a small profit in streaming.

In the fourth quarter, Netflix trounced analyst expectations on sales and earnings, while adding a whopping 18.9 million new users. That is twice as many as Wall Street was anticipating and 44% more than it recorded last year.

Over the past decade, NFLX stock has produced annual returns of 34%, or almost triple the S&P 500‘s 13% gain. 

The streaming service has proved adept at changing with how people consume entertainment. It grew from DVDs by mail to streaming when that changed, and will likely transform again when we’re watching holograms or whatever the next phase of movie viewing is in the future.

Netflix isn’t quite the last man standing in streaming, but it is standing tallest, and makes a solid investment pick.

Chipotle Mexican Grill (CMG)

Fast-casual restaurant chain Chipotle Mexican Grill has been a hit ever since being spun off from McDonald’s (NYSE:MCD) in 2006. A perfect mix of convenience, quality, and an affordable menu continues to resonate with consumers who return again and again to its restaurants.

Despite several outbreaks of E.coli that temporarily damaged its reputation and brand in 2016, Chipotle bounced back. Partly that was the result of adding drive-thru windows to its restaurants. They became an imperative though during the pandemic and the fast-casual restaurant began punching holes in the walls of existing restaurants to add even more. Most new restaurants Chipotle opens now have them.

Coupled with investments in mobile ordering technology, adding quick-selection food options, and expanding its rewards program, the combination led to an explosion of sales. Chipotle’s growth wasn’t hampered by rampant government-induced inflation, either, as margins continued to widen as it raised prices to account for its higher input costs.

It continues to expand by exploring overseas opportunities. It has opened new locations across Europe and the Middle East, and recently added its first store in Canada. Chipotle also aims to nearly double the number of North American stores to about 7,000 within a few years.

After splitting its stock 50-to-1 last year, the largest stock split in the NYSE’s history, shares have bounced around and CMG stock sits 16% below its all-time high.

Although the stock doesn’t appear cheap by traditional metrics of P/E, P/S, or P/FCF, its ability to keep growing sales, comps, and profits through all types of economic conditions makes it a good bet for long-term growth.

The verdict

While both Netflix and Chipotle Mexican Grill are equally good bets, and an investor would do well with putting money in both, if you wanted one stock to put your $60,000 into, I’d favor Netflix.

Entertainment doesn’t change as much as consumer food preferences do. And while technological advances could alter how we consume programming, Netflix has proven it can change with the times. Food tastes come and go, and though Chipotle seems to have latched onto an enduring mix, Netflix seems the better choice for a long-term, buy-and-hold stock.

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