U.S. stock markets have been witnessing an impressive rally since the beginning of 2023 barring some hiccups. Wall Street’s bull run has got an added boost this year, to the surprise of a large section of financial pandits, who indiscriminately warned of overvaluation.
The last two months of the year are characterized as the holiday season. This year, Thanksgiving Day will be celebrated on Nov 28. This day is associated with feasting on turkey, sweet potatoes, wine and a lot more.
Given that good food is the theme of Thanksgiving, it should be prudent to invest in restaurant stocks with a favorable Zacks Rank. Five such stocks are: Brinker International Inc. EAT, Shake Shack Inc. SHAK, Kura Sushi USA Inc. KRUS, CAVA Group Inc. CAVA and Dutch Bros Inc. BROS.
Restaurant Industry Continues to Grow
U.S. restaurant businesses continue to grow in 2024 after an impressive turnaround in the last two years. Sales at U.S. restaurants have not been impacted much despite severe inflationary pressure.
The headline retail sales increased 0.4% month over month in October, in line with the consensus estimate. This indicates that consumer spending is still steady. Moreover, within retail sales, expenditure on food and beverage stores rose 0.7% over the prior month and 4.3% year over year.
Within the retail sector, the Zacks Defined Restaurant Industry is currently placed in the top 32% of all industries with a year-to-date return of 8.6%.
Buy 5 Restaurant Stocks Ahead of Thanksgiving Day
We have narrowed our search to five restaurant stocks that have strong growth potential for the rest of 2024. These stocks have seen positive earnings estimate revision in the last 30 days. Each of our picks carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Brinker International Inc.
Brinker International reported first-quarter fiscal 2025 results, with earnings and revenues beating the Zacks Consensus Estimate by 37.7% and 4.1%, respectively. On a year-over-year basis, the top and bottom lines increased 12.5 % and 239.3%, respectively. This upside was backed by favorable comparable restaurant sales driven by menu pricing, higher traffic and a favorable menu item mix.
The solid performance of Chili's added to the upside. EAT also intends to focus on balancing value offerings with margin expansion and adaptability to changing consumer preferences to drive growth. Additionally, EAT’s focus on digitalization, remodeling initiatives and menu innovation bodes well. Owing to strong quarterly results, EAT has raised its fiscal 2025 guidance for total revenues.
Zacks Rank #1 Brinker International has an expected revenue and earnings growth rate of 7.9% and 34.6%, respectively, for the current year (ending June 2025). The Zacks Consensus Estimate for current-year earnings has improved 15.2% over the last 30 days.
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Shake Shack Inc.
Shake Shack recently posted third-quarter fiscal 2024 results, wherein both earnings and revenues beat respective Zacks Consensus Estimate. In the quarter, SHAK ramped up its investment in marketing strategies and programs, which were aimed at increasing guest engagement and brand awareness, even amid a challenging market environment.
SHAK has been benefiting from various digital initiatives, strong Same-Shack sales and unit expansion efforts. SHAK’s digital retention continues to remain strong. SHAK has also been making more investments in digitization in an effort to sustain its digital guest enhancement strategies in the near term.
Zacks Rank #2 Shake Shack has an expected revenue and earnings growth rate of 14.9% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.8% over the last 30 days.
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Kura Sushi USA Inc.
Kura Sushi USA operates technology-enabled Japanese restaurants in the United States. KRUS offers nigiri, roll, hand roll, gunkan and desserts.
Zacks Rank #1 Kura Sushi USA has an expected revenue and earnings growth rate of 17.5% and more than 100%, respectively, for the current year (ending August 2025). The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
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CAVA Group Inc.
CAVA Group owns and operates a chain of restaurants under the CAVA brand in the United States. CAVA also offers dips, spreads, and dressings through grocery stores. In addition, CAVA provides online and mobile ordering platforms.
Zacks Rank #2 CAVA Group has an expected revenue and earnings growth rate of 32% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 30 days.
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Dutch Bros Inc.
Dutch Bros operates and franchises drive-thru shops in the United States. BROS operates through Company-Operated Shops and Franchising and Other segments. BROS serves through company-operated shops and online channels under Dutch Bros, Dutch Bros Coffee, Dutch Bros Rebel, Dutch Bros, and Blue Rebel brands.
Zacks Rank #2 Dutch Bros has an expected revenue and earnings growth rate of 30.2% and 50%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 15.4% over the last 30 days.
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Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpBrinker International, Inc. (EAT) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
Kura Sushi USA, Inc. (KRUS) : Free Stock Analysis Report
Dutch Bros Inc. (BROS) : Free Stock Analysis Report
CAVA Group, Inc. (CAVA) : 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.
