4 Appetizing Restaurant Stocks To Bet On This Holiday Season

According to Joel Naroff, TDn2K economist and president of Naroff Economic Advisors, the restaurant industry is likely to witness robust growth this holiday season on account of strong wage gains. Further, National Retail Federation president and CEO Matthew Shay remains optimistic regarding overall economic growth during the holiday season.

Per a report by eMarketer, consumers in the United States are likely to spend more than $1 trillion on retail goods this holiday season. Moreover, U.S. consumer confidence surged to its highest in 18 years in the month of October, per the Conference Board. Consumer confidence index climbed to 137.9 in October from 135.3 in September. Although the index slightly declined to 135.7 in November, consumer confidence is expected to remain strong in the months ahead.

Consequently, the ongoing economic scenario has offered a conducive environment for growth of restaurant stocks so far this year and the trend is likely to continue through the holiday season to 2019. Notably, year-to-date shares of the Zacks Retail-Restaurants industry have rallied 7.5%, outperforming the sector’s growth of 2.5%.  Meanwhile, the S&P 500’s witnessed a decline of 1.5%.

Future Prospects Look Enticing

The restaurant industry continues on the path of recovery. According to TDn2K’s The Restaurant Industry Snapshot, growth has been strong for the industry so far this year and the top-line momentum is likely to continue in 2019. Comps grew 1% in the month of November, marking the sixth consecutive month of positive sales growth for the industry. In fact, except for a slight dip in May, the restaurant industry has reported positive comps in every month starting March. Same-store traffic, which has been plaguing restaurant operators, declined 1.9% in November, indicating a 0.3 percentage points improvement from October.

Although traffic has been a concern, the industry’s top-line momentum is supported by strong growth in to-go and other forms of off-premise sales. Also, so far this year, to-go sales grew 9% year over year.

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