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4 Restaurant Stocks to Watch as Vaccine Rollout Begins

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The U.S. economy seems finally poised to reopen completely as vaccine rollout has begun. Notably, the COVID-19 vaccine candidate developed by Pfizer Inc. PFE and BioNTech SE BNTX is being administered in the United States from Dec 14, as mentioned in a CNBC article. Adding further encouragement to that, the vaccine developed by Moderna, Inc. MRNA is also to set to be administered from Dec 21, after it received approval for emergency use from the FDA, as quoted in a Wall Street Journal article.

The article further mentioned that the federal government is planning to distribute 7.9 million doses of the vaccines developed by Pfizer-BioNTech and Moderna, in the week starting Dec 21. Such a situation is sure to be beneficial for stocks that are dependent on the complete resumption of activities. In particular, restaurants have suffered this year as the pandemic led to lockdowns and practicing of social distancing measures that halted dine-in.

The restaurant industry adapted to the changing needs dictated by the pandemic as it started providing outdoor dining options, along with curbside pickups and online delivery of food. However, the outdoor dining option seems to have taken a hit with the coming of winter. Per a report by the National Restaurant Association, 52% of full-service operators said their restaurant offered on-premises outdoor dining in a space such as a patio, deck or sidewalk which was down from 74% in early September. Furthermore, the report stated that 46% of limited-service operators offered outdoor dining in late November which was down from 60% in September.

Nonetheless, now that the vaccines are being rolled out, the dine-in option should become safe in the months ahead. Moreover, online delivery, which picked up during the pandemic, is also set to hold up as the trend is projected to last. Per a report released by Morgan Stanley on Jul 17, total online delivery is being seen at $45 billion in 2020 against their prior estimate of $41 billion in 2021. It is expected to reach 13% of the addressable market this year and 16% by 2022, against 2025 in their previous estimate.

Moreover, the government has also finally arrived at a deal on further stimulus. Notably, House Speaker Nancy Pelosi stated in a press release on Dec 20 that a coronavirus relief package had been agreed upon “that delivers urgently needed funds to save the lives and livelihoods of the American people as the virus accelerates.” This is sure to aid the economy and the restaurant industry in turn which has been in dire need of support. Meanwhile, consumer sentiment also signaled an uptick in early December. Per the University of Michigan, the index of consumer sentiment was at 81.4 in early December compared to 76.9 in November.

4 Restaurant Stocks to Watch Out For

The rollout of the coronavirus vaccine and the government’s agreement on a stimulus bill augur well for the restaurant industry. Restaurants had to bear the brunt of lockdowns and social distancing norms leading to suspension of dine-in options. Nonetheless, the industry has adapted to the situation and the availability of dine-in going ahead should only aid other trends like online ordering. Hence, it is a good time to watch out for restaurant stocks that can benefit going forward. Notably, we have selected four such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jack in the Box Inc. JACK operates and franchises Jack in the Box quick-service restaurants in the United States. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for current-year earnings increased 13.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 20.2%.

Ruth's Hospitality Group, Inc. RUTH, along with its subsidiaries, develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name in the United States. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for next-year earnings increased 18.4% over the past 60 days. The company’s expected earnings growth rate for the next five years is 15%.

Brinker International, Inc. EAT, along with its subsidiaries, owns, develops, operates, and franchises casual dining restaurants in the United States. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for current-year earnings increased 22.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 50.9%.

McDonald's Corporation MCD operates and franchises McDonald's restaurants in the United States. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for current-year earnings increased 3.2% over the past 60 days. The company’s expected earnings growth rate for next year is 33.1%.

Zacks Top 10 Stocks for 2021

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Jack In The Box Inc. (JACK) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
McDonalds Corporation (MCD) : Free Stock Analysis Report
 
Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
Ruths Hospitality Group, Inc. (RUTH) : Free Stock Analysis Report
 
Moderna, Inc. (MRNA) : Free Stock Analysis Report
 
BioNTech SE Sponsored ADR (BNTX) : Free Stock Analysis Report
 
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