Restaurant Stocks: Star Performers Of The First Half

An industry that has never ceased to be significant is food. And when it comes to fast food, people openly proclaim their undying love for juicy burgers, appetizing pizzas, grilled sandwiches, delicious ice creams, and what not.

Evidently, notwithstanding a long list of market apprehensions, restaurant stocks proved to be safe havens for investors in the first half of 2016. Further, with more people choosing to dine out these days, it is needless to say that the restaurant industry is poised to rake in more returns going ahead.

What’s Driving the Restaurant Stocks?  

The U.S. restaurant industry gained momentum at the start of 2016 on the back of improving consumer spending patterns, which in turn were positively influenced by rising wages and cheaper fuel. As dining out is usually directly proportional to consumers’ disposable income, restaurant sales are projected to rise further this year.

According to the industry forecast released by the National Restaurant Association (NRA) for 2016, sales at restaurants are projected to witness an upswing this year. The NRA estimates restaurant sales at around $782.7 billion in 2016.

5 Winners in 1H16  

With the help of the Zacks Stock Screener, we have zeroed-in on five stocks in the Retail-Restaurants industry with a top Zacks Rank and a VGM Score of ‘A’.

Back-tested results show that stocks with a VGM Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) garner better returns, on an average, than individual components, as it considers three times as many items that are correlated to stock returns.

Here are the five restaurant stocks that have had a successful run so far this year and are poised for growth in the days ahead.

Based in Texas, Dave & Buster's Entertainment, Inc. (PLAY - Snapshot Report) began trading in Oct 2014. The core concept of the restaurateur is “Eat Drink Play and Watch”, all in one location. Its menu comprises “Fun American New Gourmet” entrées and appetizers and a full selection of non-alcoholic and alcoholic beverages. Notably, the long-term growth prospects of this Zacks Rank #1 (Strong Buy) company are compelling, given its strong sales, earnings growth and significant margin improvement.

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