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5 Restaurant Stocks to Add to Your Portfolio on Soaring Sales
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The U.S. restaurant industry has made a steady rebound from the pandemic lows as sales continued to soar amid rising pressure. Needless to say, Americans left behind all inflation worries when it came to spending at restaurants.
The restaurant industry has thus outperformed the broader retail sector, which has had a rough journey over the past couple of years. Restaurant sales jumped once again in January to mark an impressive start to 2024.
The Commerce Department reported that sales at U.S. bars and restaurants grew (adjusted for seasonal variation and holiday sales but not for price changes) 0.7% month over month in January to $95.1 billion.
Year over year, sales at restaurants and bars climbed 6.3% in January. However, the retail sector continued to suffer, recording a 0.8% decline in overall retail sales.
Restaurants are the only service industry included in the retail sales report. The steady increase in restaurant sales indicates a shift, with consumers now spending more on services rather than goods.
Inflation is still high, with the consumer price index (CPI) rising 0.3% month over month in January and 3.1% on a year-over-year basis. This has raised concerns about the economy’s health as the Federal is unlikely to cut rates anytime soon. However, consumers are still spending lavishly at restaurants, which bodes well for the industry.
Also, restaurant owners are increasingly prioritizing digital advancements as well as incorporating strategies and adopting cost-effective measures to boost sales.
The growing impact of the Internet has underscored the importance of digital innovation. Major restaurant chains are entering into partnerships with delivery services and digital platforms to generate higher sales.
Our Choices
Given this scenario, it would be prudent to invest in restaurant stocks. We have narrowed down our search to five stocks, namely Yum China Holdings, Inc. (YUMC - Free Report) , Potbelly Corporation (PBPB - Free Report) , Brinker International, Inc. (EAT - Free Report) , Carrols Restaurant Group, Inc. (TAST - Free Report) and Shake Shack Inc. (SHAK - Free Report) .
Yum China Holdings, Inc. operates both company-owned and franchised restaurants. YUMC’s brands include The KFC, Pizza Hut and Taco Bell. The company also owns East Dawning, Little Sheep, and COFFii & JOY.
Yum China Holdings’ expected earnings growth rate for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. YUMC currently has a Zacks Rank #2.
Potbelly Corporation is a neighborhood sandwich concept. PBPB manages establishments for consuming food on premises to offer sandwiches, salads, soups, chili, chips, cookies, ice cream, and smoothies. Potbelly Corporation serves customers throughout the United States.
Potbelly Corporation’s expected earnings growth rate for the current year is 46.7%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. PBPB currently carries a Zacks Rank #2.
Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.
Brinker International’s expected earnings growth rate for the current year is 30.4%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 60 days. EAT currently carries a Zacks Rank #2.
Carrols Restaurant Group, Inc. is the largest BURGER KING franchisee in the United States, with over 800 restaurants, and has operated BURGER KING restaurants since 1976.
Carrols Restaurant Group’s expected earnings growth rate for the current year is 170%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 60 days. TAST presently sports a Zacks Rank #1.
Shake Shack Inc. restaurants operate in the United States and internationally. SHAK operates and grants licenses for Shake Shack restaurants, commonly known as Shacks. Here, Shake Shackpresents a menu featuring burgers, chicken, hot dogs, crinkle-cut fries, shakes, frozen custard, beer, wine and additional offerings.
Shake Shack’s expected earnings growth rate for the current year is 91.9%. The Zacks Consensus Estimate for current-year earnings has improved 51.1% over the past 60 days. SHAK currently has a Zacks Rank #2.
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5 Restaurant Stocks to Add to Your Portfolio on Soaring Sales
The U.S. restaurant industry has made a steady rebound from the pandemic lows as sales continued to soar amid rising pressure. Needless to say, Americans left behind all inflation worries when it came to spending at restaurants.
The restaurant industry has thus outperformed the broader retail sector, which has had a rough journey over the past couple of years. Restaurant sales jumped once again in January to mark an impressive start to 2024.
The Commerce Department reported that sales at U.S. bars and restaurants grew (adjusted for seasonal variation and holiday sales but not for price changes) 0.7% month over month in January to $95.1 billion.
Year over year, sales at restaurants and bars climbed 6.3% in January. However, the retail sector continued to suffer, recording a 0.8% decline in overall retail sales.
Restaurants are the only service industry included in the retail sales report. The steady increase in restaurant sales indicates a shift, with consumers now spending more on services rather than goods.
Inflation is still high, with the consumer price index (CPI) rising 0.3% month over month in January and 3.1% on a year-over-year basis. This has raised concerns about the economy’s health as the Federal is unlikely to cut rates anytime soon. However, consumers are still spending lavishly at restaurants, which bodes well for the industry.
Also, restaurant owners are increasingly prioritizing digital advancements as well as incorporating strategies and adopting cost-effective measures to boost sales.
The growing impact of the Internet has underscored the importance of digital innovation. Major restaurant chains are entering into partnerships with delivery services and digital platforms to generate higher sales.
Our Choices
Given this scenario, it would be prudent to invest in restaurant stocks. We have narrowed down our search to five stocks, namely Yum China Holdings, Inc. (YUMC - Free Report) , Potbelly Corporation (PBPB - Free Report) , Brinker International, Inc. (EAT - Free Report) , Carrols Restaurant Group, Inc. (TAST - Free Report) and Shake Shack Inc. (SHAK - Free Report) .
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Yum China Holdings, Inc. operates both company-owned and franchised restaurants. YUMC’s brands include The KFC, Pizza Hut and Taco Bell. The company also owns East Dawning, Little Sheep, and COFFii & JOY.
Yum China Holdings’ expected earnings growth rate for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. YUMC currently has a Zacks Rank #2.
Potbelly Corporation is a neighborhood sandwich concept. PBPB manages establishments for consuming food on premises to offer sandwiches, salads, soups, chili, chips, cookies, ice cream, and smoothies. Potbelly Corporation serves customers throughout the United States.
Potbelly Corporation’s expected earnings growth rate for the current year is 46.7%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. PBPB currently carries a Zacks Rank #2.
Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.
Brinker International’s expected earnings growth rate for the current year is 30.4%. The Zacks Consensus Estimate for current-year earnings has improved 3.4% over the past 60 days. EAT currently carries a Zacks Rank #2.
Carrols Restaurant Group, Inc. is the largest BURGER KING franchisee in the United States, with over 800 restaurants, and has operated BURGER KING restaurants since 1976.
Carrols Restaurant Group’s expected earnings growth rate for the current year is 170%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 60 days. TAST presently sports a Zacks Rank #1.
Shake Shack Inc. restaurants operate in the United States and internationally. SHAK operates and grants licenses for Shake Shack restaurants, commonly known as Shacks. Here, Shake Shackpresents a menu featuring burgers, chicken, hot dogs, crinkle-cut fries, shakes, frozen custard, beer, wine and additional offerings.
Shake Shack’s expected earnings growth rate for the current year is 91.9%. The Zacks Consensus Estimate for current-year earnings has improved 51.1% over the past 60 days. SHAK currently has a Zacks Rank #2.