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Restaurant Equity Analyst Sees Resurgence In Sector: Makes Best Of Breed Stock Picks
67 WALL STREET, New York - November 23, 2009 - The Wall Street Transcript has just published its Travel and Leisure Report -- Airlines, Hotels, Resorts, Cruise Lines, and Restaurants -- offering a timely review of the sector to serious investors and industry executives. This 137 page feature contains expert industry commentary through 25 in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available via The Wall Street Transcript Online.
Topics covered: Consumer Traveler Spending - U-Shaped Recovery in Restaurant Sector - Low-Cost and Network Airlines - Airline Carriers and Online Travel Agencies - Hotel Occupancy Rates - Improvement in Transportation Sector - Upscale Casual and Fast Casual Restaurants - Near-Term Risk in Hotel Space - Fuel Prices a Universal Concern - Restaurant Industry Stability - Increased Consolidation in Airline Industry - Firming of Traffic Trends in Restaurant Space
Companies include: Vail Resorts, Inc. (MTN); Air France-KLM (AFLYY); AirTrans (AAI); Alaska Air Group (ALK); Allegiant Travel Group (ALGT); American Airlines (AMR); Applebee's (APPB); Ashford (AHT); BJ's Restaurants (BJRI); Boeing (BA); Brinker (EAT); British Airways (BAY); Buffalo Wild Wings (BWLD); Burger King Corp (BKC); California Pizza Kitchen (CPKI); Carnival (CCL); Cheesecake Factories (CAKE); Chipotle Mexican Grill (CMG); Choice (CHH); Continental Airlines (CAL); Darden (DRI); Delta Airlines (DAL); Denny's (DENN); DiamondRock (DRH); Domino's Pizza (DPZ); Expedia (EXPE); Famous Dave's (DAVE); FelCor (FCH); Gaylord Entertainment (GET); Great Wolf Resorts (WOLF); Green Mountain (GMCR); Hawaiian Holdings (HA); Home Inns & Hotels (HMIN); Hospitality Properties Trust (HPT); JetBlue Airlines (JBLU); LaSalle Hotel Properties (LHO); Lufthansa (LHA); MHI Hospitality Corporation (MDH); Marriott (MAR); McDonalds (MCD); Mesa (MESA); Morton's Steakhouse (MRT); National Business Travel Association (NBTA); National Mediation Board (NMB); Orbitz (OWW); P.F. Chang's (PFCB); Panera Bread (PNRA); Peet's (PEET); Priceline (PCLN); Republic Airlines (RJET); Royal Caribbean Cruise Lines (RCL); Royal Caribbean International (HST); Ruby Tuesday (RT); Ruth's Chris Steakhouse (RUTH); Sonesta (SNSTA); Sonic (SONC); Southwest Airlines (LUV); Spicy Pickle (SPKL.OB); Starbucks (SBUX); Starwood Hotels (HOT); Strategic (BEE); Sunstone (SHO); Texas Roadhouse (TXRH); UFood (UFFC.OB); US Air (LCC); United Airlines (UAUA); Wyndham (WYN)
In the following brief excerpt from just one of the 25 in depth interviews in the 137 page Special Report, an award winning equity analyst discusses her sector and picks stock winners and losers.
NICOLE MILLER REGAN is a Managing Director and Senior Research Analyst at Piper Jaffray, where she focuses on the restaurant sector. Prior to joining Piper Jaffray in August 2006, Ms. Regan worked in equity research at ThinkEquity Partners in Minneapolis and at Sterne, Agee & Leach in New Orleans. In 2006 she was ranked number one stock picker related to 2005 coverage of her universe by StarMine. Ms. Regan holds a bachelor's degree in communications from the College of Saint Benedict.
TWST: As you talk with investors, are you seeing a lot of interest in this space?
Ms. Regan: It ebbs and flows. Some days, yes; some days, no. I think at the beginning of the year, we had very high short interest sort of betting against the group after the run-up in the first quarter. Now there really is not a lot of short interest in the group. But I expect that we need to see an improvement in October comp to get investors excited about the group again.
TWST: Are you seeing long interest?
Ms. Regan: Yes, at this point, given that the past couple of weeks the stocks have really pulled back.
TWST: Where are you pointing investors now?
Ms. Regan: We are still sticking with basically best-of-breed. So we like Darden (DRI) in terms of casual dining to play, to play on the market recovery. Whenever that happens is not as relevant as the fact that it is one of the better-managed multi-portfolio brands. We like Panera (PNRA) because of the pristine balance sheet, the way that management is managing the top line in transactions - seem to have a better hold on that than most. Pei Wei, the sister story of P.F. Chang's Bistro (PFCB), has hit a certain inflection point and is in positive-comp territory, and finally contributing to earnings. So we think that they should start to get credit for that. And then the one place that we are looking contrarian: Burger King (BKC). Basically, we don't think things are as bad there as the Street thinks.
TWST: What is it that you like about Burger King?
Ms. Regan: We just believe its underlying fundamentals are 100% unchanged in this recession. The store remodels are the right thing to do and will provide a comp benefit. Extended hours, again, is the right thing to do and will provide a comp benefit. They are the one growth concept within the context of QSR, with 3% or 5% gross new-unit openings focused on international and focused on franchise. Basically, we think they are not getting credit for that right now. Even with comps being negative, we do think there is opportunity for them to get back to positive-comp territory at the end of this fiscal year.
Note: Opinions and recommendations are as of 10/28/09
NICOLE MILLER REGAN
Managing Director & Senior Research Analyst
Piper Jaffray
The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 137 page special issue is available via The Wall Street Transcript Online .
The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.
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