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.
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.