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4 Solid Restaurant Stocks to Buy on Cooling Inflation
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Wall Street rallied last week as June inflation data showed signs of cooling, with both the consumer price index (CPI) and the producer price index (PPI) readings coming in lower than expected.
The CPI increased just 0.2% month over month in June, while the year-over-year CPI growth was 3%, a decrease from the previous month's reading of 4%. When looking at core CPI, which excludes volatile energy and food prices, there was also a 0.2% increase, marking the smallest rise in nearly two years.
Last month’s PPI also increased a meager 0.1% on a month-over-month basis. This figure surpassed expectations, as analysts had anticipated a 0.2% increase. Core PPI, which excludes volatile energy and food prices, also rose by 0.1%.
This raised optimism among investors that the Fed may finally end its interest rate hike cycle. People have been cutting down on spending lately owing to higher commodity prices. This has seen the retail sector suffering.
However, the restaurant industry, which is the only service category in the retail sales report, has been recording a steady rise in sales almost every month. The Commerce Department’s retail sales report shows sales at restaurants and bars increased 0.4% in May.
Understandably, despite sky-high prices, people weren’t hesitant about eating out or ordering food from restaurants.
This was primarily because of steady growth in personal income amid rising costs. Steady growth in wages has been helping people spend more lavishly. Personal income rose 0.4% or $91.2 billion in May.
Also, average hourly wages jumped 4.4% in June.
With inflation now cooling, market participants expect the Fed to end its interest rate hikes in the near term. Lower interest rates will allow people to spend more freely, which is likely to help boost restaurant sales further in the near term.
Our Choices
Given this situation, it would be ideal to invest in these four restaurant stocks.
Jack in the Box Inc. (JACK - Free Report) is a restaurant company that operates and franchises through Jack in the Box quick-service restaurants and is one of the nation’s largest hamburger chains. On the basis of the number of restaurants, JACK’s top 10 markets comprise nearly 70% of the total system. Jack in the Box is also the second-largest QSR hamburger chain in nine of these markets.
Jack in the Box’s expected earnings growth rate for the current year is 4.3%. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past 90 days. JACK presently carries a Zacks Rank #2 (Buy).
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates a chain of high-end casual dining restaurants in the United States. BJRI’s menu offers a wide range of dining options, including everyday lunch and dinner, special occasions and late-night business.
BJ's Restaurants’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. Presently, BJRI has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDonald's Corporation (MCD - Free Report) is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. MCD mainly operates and franchises quick-service restaurants under the McDonald’s brand. Nearly 93% of McDonald'srestaurants worldwide are owned and operated by independent local businessmen as well as women.
McDonald's expected earnings growth rate for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved more than 0.3% over the past 60 days. MCD currently has a Zacks Rank #2.
Chipotle Mexican Grill, Inc. (CMG - Free Report) , together with its subsidiaries, operates quick-casual and fresh Mexican food restaurant chains. CMG offers a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads.
Chipotle Mexican Grill’s expected earnings growth rate for the current year is 34.4%. The Zacks Consensus Estimate for current-year earnings has improved more than 0.3% over the past 60 days. CMG currently carries a Zacks Rank #2.
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4 Solid Restaurant Stocks to Buy on Cooling Inflation
Wall Street rallied last week as June inflation data showed signs of cooling, with both the consumer price index (CPI) and the producer price index (PPI) readings coming in lower than expected.
The CPI increased just 0.2% month over month in June, while the year-over-year CPI growth was 3%, a decrease from the previous month's reading of 4%. When looking at core CPI, which excludes volatile energy and food prices, there was also a 0.2% increase, marking the smallest rise in nearly two years.
Last month’s PPI also increased a meager 0.1% on a month-over-month basis. This figure surpassed expectations, as analysts had anticipated a 0.2% increase. Core PPI, which excludes volatile energy and food prices, also rose by 0.1%.
This raised optimism among investors that the Fed may finally end its interest rate hike cycle. People have been cutting down on spending lately owing to higher commodity prices. This has seen the retail sector suffering.
However, the restaurant industry, which is the only service category in the retail sales report, has been recording a steady rise in sales almost every month. The Commerce Department’s retail sales report shows sales at restaurants and bars increased 0.4% in May.
Understandably, despite sky-high prices, people weren’t hesitant about eating out or ordering food from restaurants.
This was primarily because of steady growth in personal income amid rising costs. Steady growth in wages has been helping people spend more lavishly. Personal income rose 0.4% or $91.2 billion in May.
Also, average hourly wages jumped 4.4% in June.
With inflation now cooling, market participants expect the Fed to end its interest rate hikes in the near term. Lower interest rates will allow people to spend more freely, which is likely to help boost restaurant sales further in the near term.
Our Choices
Given this situation, it would be ideal to invest in these four restaurant stocks.
Jack in the Box Inc. (JACK - Free Report) is a restaurant company that operates and franchises through Jack in the Box quick-service restaurants and is one of the nation’s largest hamburger chains. On the basis of the number of restaurants, JACK’s top 10 markets comprise nearly 70% of the total system. Jack in the Box is also the second-largest QSR hamburger chain in nine of these markets.
Jack in the Box’s expected earnings growth rate for the current year is 4.3%. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past 90 days. JACK presently carries a Zacks Rank #2 (Buy).
BJ's Restaurants, Inc. (BJRI - Free Report) owns and operates a chain of high-end casual dining restaurants in the United States. BJRI’s menu offers a wide range of dining options, including everyday lunch and dinner, special occasions and late-night business.
BJ's Restaurants’ expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the past 60 days. Presently, BJRI has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDonald's Corporation (MCD - Free Report) is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. MCD mainly operates and franchises quick-service restaurants under the McDonald’s brand. Nearly 93% of McDonald'srestaurants worldwide are owned and operated by independent local businessmen as well as women.
McDonald's expected earnings growth rate for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved more than 0.3% over the past 60 days. MCD currently has a Zacks Rank #2.
Chipotle Mexican Grill, Inc. (CMG - Free Report) , together with its subsidiaries, operates quick-casual and fresh Mexican food restaurant chains. CMG offers a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads.
Chipotle Mexican Grill’s expected earnings growth rate for the current year is 34.4%. The Zacks Consensus Estimate for current-year earnings has improved more than 0.3% over the past 60 days. CMG currently carries a Zacks Rank #2.