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3 Restaurant Stock Picks for 2016

The restaurant industry is one that usually garners a great deal of attention from investors, as consumer preferences and eating habits seem to be ever-changing, and so too do the restaurant stock winners and losers. The restaurant category is also considered one of the better industries in the market by Zacks, ranking in the top 29% of all industries. As the New Year quickly approaches and investors look to re-asses their portfolios, let's take a look at 3 current strong-buy-ranked restaurant stock pick ideas for 2016.

1. McDonald's Corp. MCD

If you haven't already noticed, it seems as though McDonald's is currently turning itself around and getting back on the right track to success. Though the past couple years have been tough, the iconic American burger chain has been performing quite well in the last few months of 2015, and the company is poised to roll into 2016 and keep its positive momentum.

McDonalds is currently a Zacks Rank #1 (Strong Buy), and for good reason. In its most recent earnings report, the corporation was able to beat the Zacks EPS Consensus by 10%, posting an EPS of $1.40, compared to the estimate of $1.27. Many investors and analysts of McDonald's have been concerned about the company's same-store-sales growth, as it hasn't been positive recently, but in Q3, the company was able to post growth of 4% globally. Also, for the first time in two years, McDonald's saw positive same-store-sales growth in the U.S., posting growth of 0.9%.

Analysts seem to think 2016 will be a year in which McDonalds could see a great deal of success, as there have been 16 estimate revisions upward for the year in the past 60 days, pushing the Zacks Consensus EPS Estimate up to $5.35, from $5.13. With projected EPS growth of 9.3% for the year and an appetizing dividend of 3.1%, investors should surely be looking into McDonald's as a portfolio addition for the upcoming year.

2. Jack in the Box JACK

Another restaurant stock to consider for 2016, one that also holds a Zacks Rank #1 (Strong Buy), is Jack in the Box (JACK). The company has a B for its Growth, Value, and Momentum Style Scores from Zacks, and also offers a dividend of 1.6%.

Analysts seem to be bullish on the stock for the upcoming year too, as there have been 8 estimate revisions upward for 2016 in the past 60 days, and the consensus estimate now sits at $3.63, up previously from $3.54.

Jack in the Box is not nearly as established as McDonald's, as the company has not even touched half of the U.S. state count. But with projected sales growth of 6.17%, projected EPS growth of 20.83%, and its subsidiary Qdoba producing solid revenue and same-store-sales growth, there are plenty of reasons to consider this smaller cap stock for a portfolio in 2016.

3. Bojangles Inc. BOJA

Based in North Carolina, Bojangles Inc. (BOJA) operates and franchises restaurants that offer a southern-style menu, with its chicken sandwich and buttermilk-biscuits as menu cornerstones. A fellow Zacks Rank #1 (Strong Buy) stock, Bojangles presents yet another solid portfolio addition for 2016.

The stock currently has an A for its Value Style Score, and a B for its Growth Score from Zacks. The stock has a 18.92 P/E ratio, lower than the industry average of 24.75, and a projected sales growth of 13.31%. In regards to 2016, the company has projected EPS growth of 9.91%. Analysts seem to be bullish on this stock as well, with 7 upward estimate revisions for 2016 coming in just the last 60 days.

With just recently becoming a publicly traded company in 2015, Bojangles is very new to the open market, but that is no reason for it not to be a possible stock pick for 2016. Analysts have positive predictions and high expectations for the company, and if it is able to perform up to where it is projected to, Bojangles will likely see positive results .

Bottom Line

As one of the higher ranked industries by Zacks, the restaurant industry is one that many investors should be conscious of if they are not already. The industry provides several solid options for portfolio additions, but the three specifically picked above have analysts buzzing heading into 2016, and they should garner investors' attention as well.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MCDONALDS CORP (MCD): Free Stock Analysis Report

JACK IN THE BOX (JACK): Free Stock Analysis Report

BOJANGLES INC (BOJA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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