5 Stocks Your Portfolio is Hungry For
Benjamin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Going out to eat is fun. All the possibilities of a delicious meal make your mouth water in anticipation of your hunger pangs being satiated. Going out to eat is also hard. Friends, co-workers, and family all struggle with the decision of where to go to eat. Once the location is nailed down you still have the difficult task of deciding what to order. A battle waged between choosing to chow down on a burrito as big as your head versus tackling a juicy bacon cheeseburger is tough. Figuring out what companies are responsible for filling our bellies may also be good investments is even tougher. Here is a look at five restaurant stocks that over the long haul may require extra notches on your portfolio’s belt.
Darden Restaurants (NYSE: DRI) is the company that operates Red Lobster, Olive Garden, Bahamas Breeze, and Seasons restaurants. All of Darden’s offerings are a variation of the same theme but their restaurants have been successful at capturing the tastes of the masses. When people go to one of Darden’s restaurants they are spending substantially more money than a visit to a quick service or fast food restaurant. Darden’s restaurants also benefit from high margin alcohol sales. Darden has an attractive P/E ratio around 15.
Yum! Brands (NYSE: YUM) is the largest restaurant company in the world. They are behind great brands such as A&W, KFC, Long John Silvers, Pizza Hut, and Taco Bell. Buying Yum! Brands is a quick and easy way to spread your investment dollar over a broad range of fast food chains. Yum! Brands has significant international operations that provide investors exposure to the growth potential of their popular brands in new and growing international markets. Yum! Brands also has one of the best stock ticker symbols and at a P/E at about 21 it may be at a tasty price.
Panera Bread (NASDAQ: PNRA) operates bakery style café restaurants and provides catering services with an emphasis on high quality fare. Panera restaurants are known as fast-casual and offer a unique menu that differentiates them from many of their competitors. One of Panera’s competitive advantages is their company owned and operated distribution system. Bread dough is made fresh in regional facilities and transported to the restaurants where it is baked fresh daily. Panera restaurants are a place where customers feel comfortable and encouraged to linger to work, socialize, or just relax, all which increases the amount of money people will usually spend during each visit. Panera’s P/E ratio is around 30 and there is plenty of room for this company to rise.
Buffalo Wild Wings’ (NASDAQ: BWLD) name leaves little to the imagination. Their restaurants are known for their chicken wings and atmosphere. Unlike many of their competitors Buffalo Wild Wings provides a bar atmosphere where families feel comfortable and welcomed. Buffalo Wild Wings also benefits by long customer visits usually associated with sporting events in which patrons quickly rack up charges for food and high margin alcohol. With a P/E of about 25 Buffalo Wild Wings looks like it may be at a great price and this company has plenty of opportunity to expand.
The Wendy’s Company (NASDAQ: WEN) owns and franchises Wendy’s Old Fashioned Hamburger restaurants. Unlike several of the previously mentioned companies The Wendy’s Company is focused solely on their Wendy’s restaurant business. Much like Panera, Wendy’s separates themselves from their competition by the quality of their food. Wendy’s is focused on trying to provide higher priced and higher quality offerings that will come with higher profit margins. While their P/E ratio in the neighborhood of 146 may look scary, this company has a lot of room to grow. Wendy’s still has the opportunity to expand their store hours with breakfast offerings, which the company is currently experimenting with in several test markets. Wendy’s also has a very long runway for potential international growth. Both Wendy’s and their franchisees are also investing in remodeling or rebuilding older restaurants. The new Wendy’s restaurants allow for much of the same atmosphere of a Panera where customers are encouraged to lengthen the duration of their visits and increase their purchases. Wendy’s has a strong brand, quality products, and more importantly, a long-term focus in improving and growing their business over attempting to please the market in the short term.
Fool blogger Ben Karns owns shares in The Wendy's Company. The Motley Fool owns shares of Buffalo Wild Wings, Darden Restaurants, and Panera Bread. Motley Fool newsletter services recommend Buffalo Wild Wings, Panera Bread, and Yum! Brands. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.