Are These The Best Undervalued Stocks In The Stock Market Right Now?
At the start of the pandemic, restaurant stocks in the stock market were thoroughly battered by the severe restrictions and mandates on dining. As such, restaurants were forced to switch to pickup and delivery operations. Fast forward to today, dining restrictions around the country have eased and the restaurant industry seems to be recovering. As such, investors may be watching restaurant stocks this earnings season as the economy reopens.
Take Chipotle Mexican Grill for example. Just yesterday, the company announced strong fourth-quarter and full-year earnings. Elsewhere, the owner of Chili’s and Maggiano’s Little Italy, Brinker International (NYSE: EAT) also saw its second-quarter sales come in at $904.5 million, rising 21% year-over-year. The company credited its success from increased in-person dining. More importantly, Brinker was able to improve its operating margin despite the rising costs. With that in mind, it is important to keep an eye on how well these food companies deal with inflation in the coming quarters. Considering all this, here are 5 restaurant stocks to check out in the stock market today.
Top Restaurant Stocks To Buy [Or Sell] Right Now
- Chipotle Mexican Grill Inc. (NYSE: CMG)
- McDonald’s Corporation (NYSE: MCD)
- Starbucks Corporation (NASDAQ: SBUX)
- Shake Shack Inc. (NYSE: SHAK)
- Restaurant Brands International Inc. (NYSE: QSR)
Chipotle Mexican Grill
Chipotle Mexican Grill reported its fiscal fourth quarter results that topped Wall Street’s expectations after the closing bell Thursday. For the most part, Chipotle credited menu price hikes, strong online sales and demand for its limited-time smoked brisket for its sales growth in the quarter. In detail, the company reported a revenue growth of 22% to $1.96 billion, comfortably above the FactSet consensus forecast for $1.6 billion. Additionally, the adjusted diluted earnings per share were $5.58, representing a 60% increase from $3.48 last year.
Despite being one of the largest restaurant companies in the world, the fast-casual company is not resting on its laurels. Just this year alone, the company is expecting another between 235-250 new restaurants opening.
What’s more, if you’re looking for stocks with pricing power, look no further than Chipotle.In fact, the company recently received an upgrade from Morgan Stanley (NYSE: MS) to ‘Overweight’, citing Chipotle to have best-in-class pricing power. Considering the improving fundamentals, would CMG stock make your list of top restaurant stocks to buy right now?
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Another top restaurant stock to look at is McDonald’s. Being one of the largest fast-food chains in the world, McDonald’s is likely a stranger to no one. With over 39,000 locations in over 100 countries, the company serves over 60 million customers daily. Its product offerings include a wide variety of burgers, chicken products, breakfast items, and desserts. Over the past year, MCD stock has risen by about 20%. On January 27, McDonald’s reported its fourth-quarter and full-year 2021 results.
Diving in, combined sales from all channels grew by 21% for the full year, surpassing $112 billion globally. In the U.S, sales for the year grew by 13.8% year-over-year, making it the highest year-over-year sales growth ever recorded. As for its earnings, diluted earnings per share was $10.04, an increase of 59% to the year before.
Commenting on the company’s performance, CEO Chris Kempczinski said, “While 2021 was a year of continued challenges around the world, the McDonald’s System came together with unparalleled dedication and delivered truly exceptional performance.” With that being said, do you have MCD stock on your watchlist?
Next, is Starbucks, a company that only needs little introduction, seeing that it is the largest coffeehouse chain in the world. The coffeehouse on average serves about 4 billion cups of coffee a year globally. Through its global network of 34,000 stores, the company serves high-quality arabica coffee to its customers. At the start of the month, the company announced its fiscal first quarter results.
For starters, its consolidated net revenues for the quarter were up 19% to $8.1 billion. As for its comparable store sales, that figure was up 13% globally, driven by a 10% increase in comparable transactions and a 3% increase in average ticket. Looking at its profits, GAAP earnings per share of $0.69 grew 30% over the prior year.
Besides its financials, the company also opened 484 net new stores. This amounts to a 4% year-over-year unit growth for the quarter. Additionally, its Starbucks Rewards loyalty program 90-day active members in the U.S grew to 26.4 million, increasing by 21% compared to the year before. Given its performance, would you consider buying SBUX stock?
Put simply, Shake Shack is a burger joint of roadside burger stands. Its food offerings include burgers, hot dogs, fries, milkshakes to name a few. For a sense of scale, the company operates over 300 Shacks, of which over 200 are domestic, company-operated Shacks. Besides that, it also has over 116 international licensed Shacks. Last month, the company reported its preliminary unaudited results for the fourth quarter of 2021.
Accordingly, Shack Shack reported a total revenue increase of 29% year-over-year, putting sales at over $203 million. On a yearly basis, revenue figures amount to over $739 million, or a rise of 41.5% year-over-year.
Moreover, Shack sales continued to recover with same-shack sales growth of 20.8% compared to 2020. In 2022, the company aims to open up 75 more restaurants across the globe, which includes 10 locations to its growing drive-thru footprint. With its earnings release next week, should you keep an eye on SHAK stock?
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Restaurant Brands International
Wrapping up our list of restaurant stocks is Restaurant Brands International (QSR). The Canadian company’s portfolio includes the likes of several major names in the fast-food industry. Specifically, it includes Burger King, Popeyes, and Tim Horton to name a few. According to QSR, the company facilitates approximately $31 billion in system-wide sales annually. QSR is able to do so by its impressive network of over 27,000 restaurants operating across more than 100 countries.
Not long ago, the company announced a regional partnership with Ant Group. The aim of which is to digitally transform its Asia Pacific operations. Evidently, the Ant Group will implement a range of digital solutions.
Namely, a mini program Software-as-a-Service (SaaS) solution and Alipay+, a cross-border mobile payment solution. By doing so, it would allow diners to enjoy a seamless and convenient omni-channel experience. On top of that, it would also boost the operational efficiency of its respective restaurants. With this partnership in mind, do you think QSR stock is one to watch?
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