5 Restaurant Stocks to Buy as Sales Continue to Soar
The restaurant industry has been putting up a great fight amid ongoing inflationary pressures. Sales have been steadily rising, which is a good sign for the industry. Although people have been spending cautiously owing to sky-high commodity prices, consumers have been spending lavishly on eating out.
According to the latest report from the Commerce Department, sales at U.S. bars and restaurants increased 0.4% in May after increasing 0.6% in April. Food prices are still high but consumer spending has been steady.
This comes as retail sales increased 0.3% in May after a 0.4% jump in April. The retail sector is also showing signs of a rebound. Restaurant sales are the only service category included in the retail sales report.
Solid sales seen in U.S. bars and restaurants during May suggest a resurgence in consumer spending on services as demand for consumer goods continues to slow owing to rising price pressures.
However, the good thing is that inflation has finally started showing signs of easing, with Consumer Price Index increasing just 4%, while the Producer Price Index decreased 0.3% in May.
This made the Fed finally halt its interest rate hikes in June after increasing it by 500 basis points over the past 15 months.
Also, robust job additions are being made to the U.S. economy almost every month. In May, the economy added 339,000 jobs, which proves that the labor market is resilient. This coincides with a steady increase in wages almost every month, which is improving consumers’ purchasing power.
Our Choices
Given this situation, it would be ideal to invest in these five restaurant stocks.
BJ's Restaurants, Inc. BJRI owns and operates a chain of high-end casual dining restaurants in the United States. BJRI’s restaurants operate as BJ’s Restaurant & Brewery /BJ’s Restaurant & Brewhouse or BJ’s Pizza & Grill or BJ’s Grill. The 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 next year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the past 60 days. Presently, BJRI sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chuy's Holdings, Inc. CHUY owns and operates full-service restaurants serving a distinct menu of authentic Mexican food. CHUY offers a menu which includes appetizers, soups and salads, tacos, burritos, enchiladas, fajitas and combination platters. Chuy's Holdings operates chains throughout Texas, Alabama, Indiana, Kentucky and Tennessee. Chuy's Holdings, Inc. is headquartered in Austin, TX.
Chuy's Holdings’ expected earnings growth rate for the current year is 27.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. CHUY presently carries a Zacks Rank #2 (Buy).
McDonald's Corporation MCD 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 0.8% over the past 60 days. MCD currently carries a Zacks Rank #2.
Wingstop Inc. WING franchises and operates restaurants. WING’s operating segment consists of the Franchise and Company segments. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’sexpected earnings growth rate for next year is 15.7%. The Zacks Consensus Estimate for current-year earnings has improved3.4% over the past 60 days. WING currently has a Zacks Rank #2.
Yum China Holdings, Inc. YUMC 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 89.5%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 60 days. YUMC currently has a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Chuy's Holdings, Inc. (CHUY) : Free Stock Analysis Report
Wingstop Inc. (WING) : Free Stock Analysis Report
Yum China (YUMC) : Free Stock Analysis Report
