For Immediate Release
Chicago, IL - April 07, 2017 - Zacks Value Investor is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: ( https://www.zacks.com/stock/news/255431/whos-the-next-mcdonalds)
Who's the Next McDonald's?
Welcome to Episode #36 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service , shares some of her top value investing tips and stock picks.
Value investing is always about screening for the lowest P/E or PEG ratios and going from there. Sometimes, value can be found when there are sell offs in an industry, which leaves some companies trading below their industry peers.
Tracey has been watching the restaurant group for some time. It was one of the hottest sectors in 2014 and 2015 as nearly a dozen companies when IPO.
Many of those soared but have since come back down to earth. Has that created a buying opportunity?
Even McDonald's Started Small
Many of the new IPOs are small cap restaurant brands. They may only have stores in one area of the US. You may not have even eaten at one of these yet.
But there was a time when no one had heard of McDonald's either. It can take decades for a restaurant brand to expand across the United States and then globally.
There are plenty of smaller restaurant chains whose stock has gotten beaten up in the last few years.
Which have possibility? And are any deals?
3 Small Cap Chains Which Could Be the Next McDonald's
1. Habit Restaurants (NASDAQ: HABT - Free Report ) is a Santa Barbara burger chain with a $566 million market cap and about 172 locations. It's starting to expand out of its home base of California and will open between 31 and 33 new restaurants this year. Shares are off 52% since the IPO but still trade with a forward P/E of 60.
2. Potbelly Corporation (NASDAQ: PBPB - Free Report ) is a Chicago-based hot sandwich chain with a market cap of $347 million. It IPO'd in 2013 and shares crashed in 2014. They are still down 55%. But earnings are on the move higher, with 2018 expected to grow 14%. It has a forward P/E of 29.6.
3. Zoe's Kitchen (NYSE: ZOES - Free Report ) is a Plano-based Mediterranean food chain with 190 locations in 20 states, mostly in the Southeast. It's in a "hot" food area, focusing on the healthy eating market. Since its 2014 IPO, shares are down 29.3%. It's finally expected to be profitable in 2017, but is expected to earn just $0.03 a share. That translates into a forward P/E of 516.
These chains are all "young" by industry standards.
There's no guarantee they can expand successfully outside of their own home markets, of course.
And there's always things that can happen along the way.
Is Chipotle worth a look by value investors?
Tune into this week's podcast to find out.
Want more value investing insights from Tracey?
Check out her weekly Value Investor service to receive more in-depth analysis on value companies and see which stocks Tracey thinks are the best bargains now.
It holds between 20 and 25 value stocks for the long haul.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros .
Follow us on Twitter: https://twitter.com/zacksresearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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