In this article, we discuss 5 defensive restaurant stocks to buy amid recession fears. You can skip our detailed analysis of these stocks and the current market situation, and go directly to 10 Defensive Restaurant Stocks To Buy Amid Recession Fears.
5. Sysco Corporation (NYSE:SYY)
Number Of Hedge Fund Holders: 31
Sysco Corporation (NYSE:SYY), one of the world’s largest broadline food distributor, is a Texas-based food company that is involved in the marketing and distribution of food products, smallwares, kitchen equipment and tabletop items to restaurants.
On June 29, Sysco Corporation (NYSE:SYY) was one of Barclays’ top picks in a defensive sector as quick service servants are gaining more traction among consumers than higher-cost casual dining. Analyst Jeffrey Bernstein raised his price target on the stock to $102 with an Overweight rating on the shares.
JPMorgan analyst John Ivankoe upgraded Sysco Corporation (NYSE:SYY) to an Overweight rating after having the food distribution stock slotted at Neutral on May 26. According to the analyst, the meeting with Sysco’s CEO and CFO gave him confidence of upcoming supply chain and delivery changes to increase market share across the broad U.S. account base. In addition, underlying demand is said to look solid, including the ability to pass on continued back-door commodity cost increases.
Insider Monkey’s Q1 database shows that Sysco Corporation (NYSE:SYY) remained popular among elite funds, with 31 hedge fund positions, up from 25 a quarter earlier. The combined value of hedge fund investments stood at over $1.71 billion. With over 11.5 million shares, Trian Partners was the company’s leading shareholder in Q1.
4. Texas Roadhouse, Inc. (NASDAQ:TXRH)
Number Of Hedge Fund Holders: 35
Texas Roadhouse, Inc. (NASDAQ:TXRH) is an American steakhouse that specializes in steaks in a Texan and Southwestern cuisine style. Cited as one of Jeffrey Bernstein’s top picks in casual dining, the company owns and operates approximately 548 restaurants and franchises an additional 99 restaurants in 49 states and ten foreign countries.
On June 27, BofA analysts Sara Senatore and Katherine Griffin initiated coverage of Texas Roadhouse, Inc. (NASDAQ:TXRH) with a Buy rating and a $96 price target on its shares. According to the analysts, Texas Roadhouse, Inc. (NASDAQ:TXRH) ranks among the more attractive names in the restaurant space, especially amidst a market downturn toward a recession that shifts consumer behavior. Additionally, strong operating margins and a sturdy balance sheet also makes the company a more solid pick compared to its close peers.
In Q1 2022, 35 hedge funds tracked by Insider Monkey reported owning stakes in Texas Roadhouse, Inc. (NASDAQ:TXRH), down from 35 in the previous quarter. These stakes hold a consolidated value of roughly $796.2 million. Gabriel Plotkin’s Melvin Capital Management is the biggest shareholder of Texas Roadhouse, Inc. (NASDAQ:TXRH), with a stake worth approximately $150 million.
3. US Foods Holding Corp. (NYSE:USFD)
Number Of Hedge Fund Holders: 40
US Foods Holding Corp. (NYSE:USFD) is a leading US foodservice distributor that is partnered with approximately 250,000 restaurants and foodservice operators across the nation and provides its customers with a broad and comprehensive suite of e-commerce, technology and business solutions.
For the fiscal first quarter of 2022, US Foods Holding Corp. (NYSE:USFD) reported an EPS of $0.36, beating estimates by $0.02. Additionally, the revenue came in at $7.80 billion, an increase of 23.88% on a year-over-year basis.
Based on Insider Monkey’s Q1 database, 40 hedge funds were bullish on US Foods Holding Corp. (NYSE:USFD), up from 38 funds in the preceding quarter. The total stakes held in Q1 2022 amounted to approximately $1.86 billion. Scott Ferguson’s Sachem Head Capital is the largest shareholder of the company, with a position worth roughly $721.9 million.
2. Starbucks Corporation (NASDAQ:SBUX)
Number Of Hedge Fund Holders: 58
Based in Seattle, Washington, Starbucks Corporation (NASDAQ:SBUX) is an American multinational chain of coffeehouses and roastery reserves that operates in over 80 different countries and is recognized for its roasted whole beans and ground coffees, ready-to-drink beverages, and multiple food products. Barclays analyst Jeffrey Bernstein named the company as the strongest large cap stock for the next year among his defensive restaurant picks.
Earlier this May, MKM Partners analyst Brett Levy maintained a Buy rating on Starbucks Corporation (NASDAQ:SBUX) stock and lowered the price target to $98 from $105, stating that the firm has growth prospects in the long-term despite near-term headwinds.
Starbucks Corporation (NASDAQ:SBUX) is a leader among the beverage stocks on Wall Street. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Starbucks Corporation (NASDAQ:SBUX), with 8.2 million shares worth more than $749 million.
In its Q1 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Starbucks Corporation (NASDAQ:SBUX) was one of them. Here is what the fund said:
“We trimmed our positions in most of these companies in 1Q 2022 and sold our stake in Starbucks after a 12+ year holding period. In our view, Starbucks Corporation (NASDAQ:SBUX) continues to be in a unique position to serve its customers who value the quality of its products and the convenient way they can be purchased. At the same time, Starbucks’ business is maturing in western markets, and its employee and store-related costs are growing, which should lead to slower earnings growth than we would prefer and further P/E multiple compression. We believe we have better opportunities as we continue to assess the impact of these issues for Starbucks Corporation (NASDAQ:SBUX).”
1. McDonald’s Corporation (NYSE:MCD)
Number Of Hedge Fund Holders: 58
McDonald’s Corporation (NYSE:MCD) is an America-based multinational fast food chain, founded in 1940 as a restaurant by Richard and Maurice McDonald. The restaurant giant has operations in more than 118 countries around the globe, making it one of the best defensive restaurant stocks to buy now.
On June 7, UBS analyst Dennis Geiger maintained a Buy rating and $290 price target on McDonald’s Corporation (NYSE:MCD), stating that the company is well positioned as a “high quality, defensive compounder” that should prove resilient thanks to the relative benefits from pressured consumer spending and drivers that support solid sales momentum.
58 hedge funds were bullish on McDonald’s Corporation (NYSE:MCD) at the end of the first quarter with aggregate positions worth $2.73 billion. This is up from 57 hedge funds in the preceding quarter. Jim Simons’ Renaissance Technologies was the biggest shareholder of McDonald’s Corporation (NYSE:MCD) in the first quarter, with a stake worth nearly $626 million.
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