10 Best Restaurant Stocks to Buy Today

5. Domino’s Pizza, Inc. (NYSE:DPZ)

Number of Hedge Fund Holders: 40

Domino’s Pizza, Inc. (NYSE:DPZ) took its birth in 1960, and since then, it has evolved into a massive pizza restaurant chain. It is one of the fastest-growing fast-food chains in the U.S., with its number of locations worldwide totaling almost 20,000, as of now.

Domino’s Pizza, Inc. (NYSE:DPZ) is one of the best restaurant stocks to buy due to its sweet upside potential – according to analysts, the stock price is expected to hit $555.1 from its current price of $497.33, which is an upside of 11.6%! On top of that, the company surpassed analysts’ expectations, as its revenue rose 5.9% to $1.08 billion, as compared to Q1 2023. Even more importantly, the higher revenue drove the profitability of the company, as its margin saw an uptick of 10%, reaching 12%!

Moreover, forecasts suggest that the revenue is set to keep growing in the next year, at a rate of 6.4%! $1.2 billion worth of hedge fund holdings are in for the stock, as of Q1 2024, extending their case in favor of the stock’s bright future. DPZ shares also more than doubled over the last 5 years. Last month we also shared the news that TD Cowen upgraded its price target to $610. DPZ shares lost 7% of their value since then and now offer a higher upside potential. Having said these, we aren’t too convinced. The stock’s forward PE ratio is 32 and DPZ isn’t an AI company that’s growing its revenues by triple digits. Its revenue was $4.36 billion in 2021 and $4.48 billion in 2023. This means its revenue growth rate is less than the inflation rate since the end of 2021. A 6% revenue growth rate in Q1 is not that bad, but this stock shouldn’t trade at a forward PE of 32 unless it can double its revenues over the next 7 years or so.