Baron Funds, an investment management company, released its “Baron Discovery Fund” third quarter 2022 investor letter. A copy of the same can be downloaded here. Compared to the Russell 2000 Growth Index benchmark, which was slightly positive, the fund (institutional shares) was flat in the third quarter. In addition, please check the fund’s top five holdings to know its best picks in 2022.
In the third-quarter letter, Baron Funds discussed stocks like Texas Roadhouse, Inc. (NASDAQ:TXRH). Headquartered in Louisville, Kentucky, Texas Roadhouse, Inc. (NASDAQ:TXRH) is a US-based restaurant operator. On October 28, 2022, Texas Roadhouse, Inc. (NASDAQ:TXRH) stock closed at $98.71 per share. One-month return of Texas Roadhouse, Inc. (NASDAQ:TXRH) was 13.12% and its shares gained 6.02% of their value over the last 52 weeks. Texas Roadhouse, Inc. (NASDAQ:TXRH) has a market capitalization of $6.599 billion.
Baron Funds made the following comment about Texas Roadhouse, Inc. (NASDAQ:TXRH) in its Q3 2022 investor letter:
“We initiated a position in Texas Roadhouse, Inc. (NASDAQ:TXRH), a fast-growing casual dining restaurant operator. The company and its franchisees operate 678 restaurants in 49 states and 10 foreign countries, including 637 Texas Roadhouse restaurants, 37 Bubba’s 33 restaurants, and 4 Jaggers restaurants. The company’s success is due to its proven strategy of offering high-quality, freshly prepared food at attractive prices. Texas Roadhouse’s ability to execute this strategy better than other restaurant chains has allowed the company to be a consistent market share gainer year after year.
We expect the company’s growth algorithm to consist of mid-single-digit annual unit growth as it expands its core Texas Roadhouse brand from 637 to close to 1,000 units over time. We also expect the company to accelerate unit growth of its Bubba’s 33 Restaurants. Bubba’s 33 is a family-friendly, sports restaurant concept featuring freshly prepared foods. While over the shorter term Texas Roadhouse may be impacted by a weaker economic backdrop, over the medium to long term we believe Texas Roadhouse can grow revenues at a high single-digit rate. We also believe that as inflation pressures abate, particularly on food costs, the company can expand its operating margin. The combination of revenue growth and margin expansion should enable the company to more than double its earnings in the next five years resulting in a doubling of the stock as well.”
Texas Roadhouse, Inc. (NASDAQ:TXRH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Texas Roadhouse, Inc. (NASDAQ:TXRH) at the end of the second quarter which was 35 in the previous quarter.
We discussed Texas Roadhouse, Inc. (NASDAQ:TXRH) in another article and shared the best beaten down stocks to buy. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
