Five Fast-Food Stocks Hedge Funds Are Bullish On

Although fast-food and quick-service stocks probably won’t wow you with their performance in any given year, they are pretty dependable over the long run. Stocks such as McDonald’s Corporation (NYSE:MCD), and Starbucks Corporation (NASDAQ:SBUX) have outperformed their indexes by growing steadily and paying attractive dividends, while stocks such as Yum! Brands, Inc. (NYSE:YUM) and Chipotle Mexican Grill, Inc. (NYSE:CMG) have the potential to outperform for valuation reasons. Stocks such as Restaurant Brands International Inc (NYSE:QSR) are promising too given their growth potential. In this article, we take a closer look at the five fast-food stocks listed above, which happen to be the five in the industry that the smart money is most bullish on.

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#5 Restaurant Brands International Inc (NYSE:QSR)

 – Number of Hedge Fund Shareholders (as of March 31): 31
– Total Value of Hedge Funds’ Holdings (as of March 31): $2.89 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 32.10%

Restaurant Brands owns and operates the Burger King and Tim Hortons brands. Of the 766 active funds in Insider Monkey’s database, 31 top funds owned Restaurant Brands International Inc (NYSE:QSR) at the end of March, up by two from three months earlier. Although 31 funds doesn’t jump off the page, those funds held 32.10% of the company’s shares, making them quite overweight the stock. Some of the funds owning shares also happen to be the elite of the elite, with Warren Buffett‘s Berkshire Hathaway and Bill Ackman‘s Pershing Square both owning substantial stakes in the company at the end of the first quarter. Analysts expect substantial EPS growth for Restaurant Brands in the future, assigning the company a next-5-year average EPS growth rate of 18.43%.

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

 – Number of Hedge Fund Shareholders (as of March 31): 39
– Total Value of Hedge Funds’ Holdings (as of March 31): $1.22 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 8.60%

Chipotle Mexican Grill, Inc. (NYSE:CMG) shares have finally stabilized after last year’s E. coli incidents caused the chain’s same-store sales to crater. The stock is no longer trending lower and fewer analysts have downgraded the stock in recent months. The ownership of Chipotle among hedge funds has stabilized too. After declining sharply last year, the number of top funds holding Chipotle remained the same quarter-over-quarter as of March 31, at 39. The funds long Chipotle hope that the chain’s same-store sales will recover as time goes by and people put thoughts of the safety incidents in the past. For its part, Chipotle has dedicated substantial resources to make sure a similar event doesn’t happen again.

On the following page we’ll list the three most popular quick-service stocks among the hedge funds in our database as of March 31.