5 Best Restaurant Stocks To Buy Today

In this article, we will take a look at the 5 best restaurant stocks to buy today. If you want to see some more of the stocks, go to 11 Best Restaurant Stocks To Buy Today.

5. Domino’s Pizza, Inc. (NYSE:DPZ)

Number of Hedge Fund Holders: 32

Domino’s Pizza, Inc. (NYSE:DPZ) is an Ann Arbor, Michigan-based operator of a chain of pizza restaurants.

Experts believe that Domino’s Pizza, Inc. (NYSE:DPZ) is facing tough comparables as pizza consumption increased significantly during the COVID-19 pandemic through takeaway and home delivery services and the growth figures for the company aren’t as strong as they were during the pandemic. However, there is an overall belief that the outlook of the pizza category is still strong given its staple nature in the life of American consumers, and the near-term concerns are blown out of proportion. Domino’s Pizza, Inc. (NYSE:DPZ) offers a dividend yield of 1.32% as of October 31.

Domino’s Pizza, Inc. (NYSE:DPZ) is considered one of the best restaurant stocks as the company’s historical 3-year return on invested capital (excluding goodwill) is 186.4%, while its estimated cost of capital is 7.8% as of Q3 2022. On October 14, Andrew Strelzik at BMO Capital gave Domino’s Pizza, Inc. (NYSE:DPZ) stock an Overweight rating with a target price of $400. The analyst appreciated the company’s better-than-expected same-store sales in the Q3 2022 results.

4. Chipotle Mexican Grill, Inc. (NYSE:CMG)

Number of Hedge Fund Holders: 39

Chipotle Mexican Grill, Inc. (NYSE:CMG) is a Newport Beach, California-based fast-casual restaurant chain. The restaurant is known for its healthy offerings.

Following its Q3 2022 results, Joshua Long at Stephens reiterated an Overweight rating on Chipotle Mexican Grill, Inc. (NYSE:CMG) stock with a target price of $1,760. The analyst highlighted the company’s better-than-expected quarterly results as it outperformed adjusted EPS estimates. Revenue increased by 12.8% to $2.2 billion, while the adjusted EPS of $9.51 was 32 cents higher than the analysts’ estimate of $9.19. Following the results, the analyst also increased his Q4 2022 adjusted EPS forecast as Chipotle Mexican Grill, Inc. (NYSE:CMG) shared that it anticipates comparable store sales to grow in the mid-single to the high-single-digit range in the next quarter.

Here’s what Pershing Square Holdings said about Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2022 investor letter:

“Chipotle Mexican Grill, Inc. (NYSE:CMG) continued its impressive performance in 2022 driven by the ongoing recovery of in-restaurant sales, price increases to cover cost inflation, and successful menu innovation including pollo asado. During the second quarter, Chipotle continued to lead the restaurant industry in growth for both same-store sales (“SSS”) and new restaurants, with SSS growing 10% year-over-year or 30% on a three-year cumulative basis. On-premise sales grew 36% as consumers resumed pre-pandemic routines, while digital sales declined only 3%, continuing their persistence despite the growth of conventional sales. Chipotle remains on track to grow its store base by approximately 8% this year with a longer-term annual store growth aspiration of nearly 10% once current headwinds around construction, permitting, and supplies ease.

We believe Chipotle is one of the best-positioned consumer companies for the current inflationary world. Given significant inflation in food and labor costs, management has planned a menu price increase of approximately 4% for August following a similarly-sized price increase in March. The company has tremendous pricing power due to the superb quality of its food which is priced at a discount to many competitors with inferior offerings, marketing focused on food quality and freshness rather than cost, and a customer base that over-indexes to higher-income consumers, some of whom are trading down from pricier alternatives.

Chipotle’s economic model remains firmly intact, with restaurant-level margins in excess of 25% in the second quarter, up 0.8% year-over-year, and a consistent level of profitability expected for the current quarter. The company is debt-free and generates nearly all its sales in the U.S., insulating its earnings from the foreign currency headwinds facing many other large consumer companies. …” (Click here to read the full text)

Chipotle Mexican Grill, Inc. (NYSE:CMG) was held by 39 hedge funds as of Q2 2022.

3. Yum! Brands, Inc. (NYSE:YUM)

Number of Hedge Fund Holders: 40

Yum! Brands, Inc. (NYSE:YUM) is a Louisville, Kentucky-based franchise operator of leading restaurant brands like KFC, Pizza Hut, Taco Bell, and the Habit Burger Grill.

Andrew Charles at Cowen gave Yum! Brands, Inc. (NYSE:YUM) stock an Outperform rating with a target price of $130 on October 19. The analyst has a bullish stance on Yum! Brands, Inc. (NYSE:YUM), as he anticipates the company to benefit from the high comparable store sales for Taco Bell during Q3 2022. Owing to a number of growth drivers, including the opening of new shops, an increase in same-store sales, margin improvement, and share repurchases, Yum! Brands, Inc. (NYSE:YUM) has strong growth potential for the future. In line with this view, analysts predict that the company will increase its earnings per share by 15% in 2019 and another 13% in 2024, making it one of the best restaurant stocks to hold. Yum! Brands, Inc. (NYSE:YUM) plans to increase the number of its stores by 4% to 5% annually on average.

Yum! Brands, Inc. (NYSE:YUM) was held by 40 hedge funds as of Q2 2022.

2. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 50

McDonald’s Corporation (NYSE:MCD) is a Chicago, Illinois-based operator of fast food chain restaurants. The company claims to serve 69 million customers daily and has a presence in more than 100 countries through its 40,000 locations.

On October 28, Christopher Carril at RBC Capital increased the price target on McDonald’s Corporation (NYSE:MCD) from $275 to $295 and reiterated an Outperform rating on the stock. The analyst thinks that the company’s Q3 2022 earnings beat highlights both the offensive and defensive qualities of the stock during these uncertain economic times. McDonald’s Corporation (NYSE:MCD) has been attracting investor attention as one of the best restaurant stocks in the market.

Analysts think the US business of McDonald’s Corporation (NYSE:MCD) is less dependent on unit growth and should face tailwinds due to an environment that is focused on promotions. McDonald’s Corporation (NYSE:MCD) offers a dividend yield of 2.23% as of October 31. Since 1976, McDonald’s Corporation (NYSE:MCD) has boosted its dividends every year, reflecting 46 years of consecutive dividend growth.

As of Q2 2022, McDonald’s Corporation (NYSE:MCD) was held by 50 hedge funds.

1. Starbucks Corporation (NASDAQ:SBUX)

Number of Hedge Fund Holders: 55

Starbucks Corporation (NASDAQ:SBUX) is a Seattle, Washington-based operator of coffeehouses with a presence in 80 countries. The company has the distinction of being the operator of the biggest coffee house chain in the world.

Starbucks Corporation (NASDAQ:SBUX) stock offers a dividend yield of 2.49% as of October 31. Experts are positive about the long-term investment thesis of Starbucks Corporation (NASDAQ:SBUX) stock with slight short-term uncertainty. The strength of the brand, its focus on scale, innovation, rewards program, and positive outlook on coffee consumption will play in Starbucks Corporation’s (NASDAQ:SBUX) favor.

CEO Howard Schultz is trying to reinvent Starbucks Corporation (NASDAQ:SBUX) as the company is investing heavily in new equipment to drive greater efficiency and lower complexity of operations. Starbucks Corporation (NASDAQ:SBUX) is focusing on expanding its cold coffee-based beverages segment, as 80% of the company’s top line is now being generated by cold beverages. Starbucks Corporation (NASDAQ:SBUX) is considered amongst the best restaurant stocks as the management plans to boost EPS by 15% to 20% annually in the following years. These are ambitious but attainable long-term targets.

You can also take a peek at the Biggest Ecommerce Companies in the US and the Biggest Economies in the World in 2022.

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