A rare buying opportunity for this ASX 200 stock as it rebounds from a historic low

Guzman Y Gomez Ltd (ASX: GYG) shares are up 0.9% in Thursday lunchtime trade. At the time of writing the ASX 200 stock is changing hands for $16.69 each.

It’s welcome news for investors after a slow but steady 12-month share price decline pushed the stock to a historic-low of $16.45 on Tuesday. 

The latest uptick means the fast food operator’s share price is now down a huge 50% over the past 12 months, and down 22.6% for the year-to-date.

Now the question is this: Is this dip, and subsequent rebound, a rare buying opportunity for investors to get into a high-growth stock for cheap?

According to the analysts, it looks that way.

The ASX 200 stock is set to soar higher

TradingView data shows that analyst sentiment on the outlook for Guzman Y Gomez shares is shifting. Out of 13 analysts, seven have a buy or strong buy rating and another five have a hold rating. One has a strong sell rating.

The average target price is $22.85, which implies a potential 36% upside at the time of writing. Some are even more bullish and expect the fast-food retailer’s shares to soar up to 85% to $31 each over the next 12 months.

Morgans is one broker who is optimistic about the outlook for the stock. It recently placed a buy rating and $24 target price on the shares. 

What could push Guzman Y Gomez’s share price so high?

The Mexican fast-food restaurant has huge ambitions for business expansion. In the six months to December 31, the company opened 17 restaurants in Australia, one in Singapore, and two in the US.

As of the end of the first-half of FY26, the group owns 237 locations in Australia and 272 worldwide. 

It has another 108 restaurants in the pipeline, 32 of which are expected to open in Australia, including 23 drive-through stores. Guzman Y Gomez plans to reach 1,000 restaurants within 20 years.

Its expansion success in Australia has been exceptional, but the company has fallen short of its expansion goals overseas, particularly in the US.

According to Morgans, the company’s initial global expansion strategy was ambitious and the pace of network expansion in the US has been much slower than expected, with much more money lost than anticipated. But the broker believes global growth will soon “kick into gear” to complement what it considered a “very healthy Australian business”. 

In the first half of FY16, its network sales in Australia jumped 17.4% and its Asian network sales rocketed 19.3%. The group’s overall profit was 44.9% higher. If the company can continue expanding at the same rate, and if it manages to break the US market, its sales figures and profit margins could rise very quickly, dragging its share price up with it. 

The post A rare buying opportunity for this ASX 200 stock as it rebounds from a historic low appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.