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President Trump's re-election bid may fatten up fast-food stocks

Brian Sozzi
Editor-at-Large

Beyond Meat’s (BYND) meatless burgers may not be the only catalyst for the stock prices of restaurant companies in 2020.

Instead think along the lines of the re-election bid of notorious fast-food fan, President Trump.

The median restaurant stock has outperformed the S&P 500 in election years since 1996, according to a new research report from Wells Fargo restaurant analyst Jon Tower. Gains for restaurant stocks have ranged from a low of 4% in the 2016 presidential election, which Trump surprisingly won, to 28% in 2000, when President George W. Bush ushered into the Oval Office.

Quick-service restaurant stocks such as Chipotle (CMG) have outperformed casual dining chains like Brinker International (EAT) during presidential election years, Tower notes.

The median increase in restaurant stock prices going back to the 1996 presidential election has tallied 10.8% versus 12.8% for the S&P 500. The slight disparity here reflects the 47% plunge in restaurant stocks in the 2008 presidential election year amidst the Great Recession that saw consumer spending weaken — the S&P 500 fell 38% in that year.

Indeed, the data is interesting in light of how restaurant sales have performed during election season. Tower’s data shows U.S. industry same-store sales in non-election years have outperformed election years by 40 basis points since 2005.

As for what restaurant stocks to own into the 2020 election, Tower has several specific ideas rather than a broad sector call. He is bullish on casual dining outfit Cheesecake Factory (CAKE) due to “under-appreciated” sales and cash flow growth. McDonald’s (MCD) is also a top pick on expectations for the pace of change to accelerate under a new CEO. And last but not least, Wingstop (WING) could outperform as it more aggressively opens new locations globally.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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