With spring right around the corner, Americans all across the nation are ready to get out and enjoy the warmer weather. One top firm we cover on Wall Street is very positive on some of the restaurants that Americans love the most, as people get out of the house and enjoy the improving weather.
A new Baird research report notes that despite some of the lousy winter weather around the country, comparisons for February should be very positive, as a recent private chain survey the firm completed came in better than expected. The report also noted this:
Looking ahead, we still believe the near-term setup for the group is favorable, as we see potential for improved comparisons momentum in upcoming periods to support improved investor sentiment and higher valuation metrics for many names in our coverage.
The analysts have nine stocks rated Outperform, and here we feature four that Americans flock to on a daily basis that make good sense now.
Chipotle Mexican Grill
Despite numerous issues over the past few years, the company remains a favorite destination for those looking to eat out. Chipotle Mexican Grill Inc. (NASDAQ: CMG) operates more than 2,400 fast-casual Mexican restaurants offering freshly made burritos, tacos, burrito bowls and salads. It is 100% company operated and runs average unit volumes much higher than its peers.
The company recently hired former Taco Bell CEO Brian Niccol, who is tasked with turning around the chain, which has struggled to return to red-hot growth after a sales and reputation-crushing string of food safety lapses in late 2015. The company’s annual revenues are only slightly higher than pre-crisis levels, even after it added hundreds of new restaurants and gave away millions of dollars in free and discounted food.
Baird has a $400 price target on the shares, and the Wall Street consensus target is $308.46. The stock closed Wednesday at $319.66 a share.
It’s time to make the donuts, and many Americans are likely to get one here. Dunkin’ Brands Group Inc. (NASDAQ: DNKN), whose brands include Dunkin’ Donuts and Baskin-Robbins, is nearly 100% franchised. Core markets in the United States include New England and New York, while international core markets are South Korea and Japan. Currently operating in over 50 countries, Dunkin’ has significant unit growth potential, both domestically and internationally, with over 20,000 global units.
The company expects $2.40 to $2.45 as an earnings-per-share target for 2018 but excludes $0.30 of accretion from potential share buybacks. Dunkin’ is now targeting 1,000 net new unit openings from 2018 to 2020, with 90% of growth coming from outside the Northeast. The analysts think Dunkin’s focus on near-term margins and unit economics versus sales is the right move for the business long term.
Shareholders are paid a tasty 2.33% dividend. The Baird price target is $74, while the consensus target is $63.45. The shares closed at $59.30 on Wednesday.
The fast-food giant does a ton of business overseas and still remains a solid pick for investors seeking dividends and a degree of safety. McDonald’s Corp. (NYSE: MCD) is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.
The company reported fourth-quarter per-share earnings excluding items that were higher than the company earned last year, but revenue fell 5% year over year. However, the decline in the latest period was narrower than some analysts expected.
McDonald’s shareholders receive a 2.55% dividend. The $195 Baird price target compares with a consensus price objective of $187.04. The shares closed most recently at $158.24.
The retail giant has traded down some recently and is offering a very solid entry point. Starbucks Corp. (NASDAQ: SBUX) operates as a roaster, marketer and retailer of specialty coffee worldwide. Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single-serve and ready-to-drink coffee and tea products, juices and bottled water.
The company also licenses its trademarks through licensed stores, as well as grocery and national foodservice accounts. The company offers its products under the Starbucks, Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Ethos, Starbucks VIA, Starbucks Doubleshot, Starbucks Refreshers and Starbucks Discoveries Iced Café Favorites brand names.
Shareholders are paid a 2.03% dividend. The Baird price objective is $68. The consensus price target is $64.01, and shares closed Wednesday at $58.83.
Four companies that Americans love to visit daily that have shares that look like outstanding buys right now. The stocks make good sense for people wary of an expensive market, and all look poised to post solid first-quarter results.