According to Brian Sozzi, CEO and chief equities strategist of Belus Capital Advisors, Sonic Corporation (NASDAQ: SONC) is a burger stock that is "an even better bet" than Shake Shack Inc (NYSE: SHAK).
Sozzi noted that on Tuesday, "Sonic reported a stellar 11.5 percent increase in system same-store sales on the back of strong sales during all major parts of the day. By contrast, Shake Shack's same-restaurant sales rose 7.2 percent in the fourth quarter, its first as a public company, and 4.1 percent for all of 2014."
Sonic CFO Stephen Vaughan commented that "Sonic seems to do really well with millennials and moms with kids."
According to Sozzi, Sonic appeared to be doing well because of its focus on "serving up authentic, made-to-order fast food with a never-ending stream of new and interesting items."
Sozzi highlighted that after the company hired a new head chef from Sweden in 2012, the chef changed the ice cream from "ice milk," similar to what McDonald's Corporation (NYSE: MCD) serves, to "real ice cream shakes and frozen blasts in an array of flavor combinations." As a result, ice cream sales increased 50 percent since 2011.
Vaughan explained that millennials want to customize their food and that they want ‘real' food. For example, "if you think real ice cream, it may not necessarily be healthy, but because of the fact it's real ice cream, that lends tends to resonate with that group."
Shares of Sonic closed at $32.13 Wednesday, down 12.36 percent.
Image credit: Mike Mozart, Flickr
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