Plate Up Profits: 3 Restaurant Stocks to Relish as Consumer Spending Improves
Americans are opting to eat out and place high importance on experiences. This can be seen in the high travel spending we saw in 2023. Many people want to enjoy their meals, and even without spending on luxury dining, they still eat out. With a Fed rate cut, we could see an improvement in consumer spending, which will directly impact restaurant businesses. Considering these aspects, it is a smart move to buy restaurant stocks that have high upside potential. These three long-term stocks could have an exceptional 2024 with impressive numbers. Let’s dive into the restaurant stocks to buy now.
McDonald’s (MCD)
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One of the top restaurant stocks to own right now, McDonald’s (NYSE:MCD), managed to impress investors despite high inflation and low consumer spending. The company has a solid business model with best-in-class profit ratios. It holds a large market share and has cracked the code to a successful franchise model. This helps keep the operating costs low while ensuring steady revenue.
It is steadily expanding its market reach and ensuring high customer satisfaction with new launches, improved service and affordable products. Its financials are unparalleled, and on top of that, MCD is a dividend stock with a yield of 2.36%. The company has increased dividends for 47 years.
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It beat estimates in the fourth quarter with a revenue of $6.41 billion and a net income of $2.04 billion. Its net sales were up 8%, while the same-store sales increased by 3.4%. The company increased prices in 2023, which led to higher sales. While it has a modest outlook for 2024, it is still expected to see growth.
McDonald’s has a strong balance sheet and enough liquidity to reward the shareholders. The company is integrating artificial intelligence into its services and will benefit significantly from it. This will help reduce costs and lead to higher profitability.
It will also improve the delivery time and consumer satisfaction. The company is localizing products to meet the country’s needs, which has contributed to its success over the past few years. Consumers are getting the taste they prefer, which has helped improve sales.
Trading at $282 today, MCD stock is down 4% year to date, and this dip is a strong chance to buy. Its global market reach, impressive fundamentals, and dividend yield make it an ideal stock to own.
Domino’s Pizza (DPZ)
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Pizza chain Domino’s Pizza (NYSE:DPZ) is up 9% year to date and is trading for $452. This is one company that steadily moves upwards without making a lot of noise. It is also a dividend stock with a yield of 1.33% and has generated over 80% returns over the past five years. The stock has been on an upward trend since October 2023 and reported impressive financials.
While the stock isn’t cheap, it is a solid business to own. Domino’s has a global presence and a strong brand name. The company beat expectations in the fourth quarter results and raised the quarterly dividend by 25%. It also increased the share buyback program by $1 billion.
The company reported a revenue of $1.40 billion and an earnings per share of $4.48. It saw a 2.28% increase in the same store sales and opened over 300 overseas locations in the quarter. With so much working in favor of Domino’s, one restaurant stock will continue to thrive, no matter the market movement.
The management is confident about this year’s projections and has plans to grow the company. It aims to open 1,100 new stores by 2028 and expects annual retail sales to grow at the rate of 7% by 2028.
This company invests in AI to help customers place orders and ensure quick delivery. All these catalysts working in favor of Domino’s will help it achieve new heights in 2024 and beyond. Buy DMZ stock for steady passive income and capital growth over the coming quarters.
Restaurant Brands (QSR)
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Restaurant Brands (NYSE:QSR) has repeatedly proven its strength, and the recent quarterly results have impressed investors. Trading at $82 today, the stock is up 7% year to date and 35% in the year. While the stock is at its 52-week high, it is worth buying and holding on to.
The company operates in 100 countries and has more than 25,000 locations. It has remained resilient in times of inflation and has steadily rewarded investors. No matter the macroeconomic situation, this company will continue growing.
The company reported a revenue of $1.82 billion in the quarter and an EPS of $0.75. Its net income was $508 million, and net sales hit $1.82 billion. The revenue was driven by the increase in same-store sales at Tim Hortons’, which saw an 8.4% rise due to the growing popularity of snacks and cold drinks lineups.
Besides Tim Hortons’, Burger King enjoyed a 6.3% rise in the same store sales in the U.S. To make the most of the brand’s growing popularity, Tim Hortons will add more food to see an improvement in sales, and the marketing efforts for Burger King will be intensified.
This is another dividend stock with a yield of 2.80%. A favorite of dividend investors, Restaurant Brands is a great choice for those looking to enjoy growth and passive income at a reasonable price.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.
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