We recently compiled a list of the 10 High Growth Restaurant Stocks For 2025. In this article, we are going to take a look at where Texas Roadhouse Inc. (NASDAQ:TXRH) stands against the other high growth restaurant stocks.
Morgan Stanley recently published a report on the restaurant industry, suggesting that the tough environment that the industry is currently facing may ease out in 2025, though only modestly. Restaurants will have to continue working on providing value meals to consumers who continue to struggle to balance their income and expenses.
A balanced job market could help keep labor costs steady. However, a political campaign against immigration could be a potential headwind for the industry. A growing emphasis on robotics to improve efficiency and customer service could also play a key role in the industry’s development this year, though it is too early to determine the financial implications of these moves.
We decided to shortlist a few stocks that we believe could benefit from an improving industry environment in 2025. To come up with the list of 10 restaurant stocks with a high growth rate, we only considered stocks that have grown by more than 15% in the last 5 years or since IPO and have a market cap of at least $1 billion.
View of kitchen staff working together to deliver an extraordinary dining experience.
Texas Roadhouse Inc. (NASDAQ:TXRH)
Texas Roadhouse Inc. runs a casual dining restaurant chain that serves American-inspired food. The company has restaurants in 49 states of the U.S. and also in ten countries around the world. It operates and manages restaurants under Jaggers, Texas Roadhouse, and Bubba’s 33 names.
TXRH is a restaurant that has survived 20 years of Wall Street attention and grown at a pace it was comfortable with. The same cannot be said about a few other restaurants that were unable to deal with their business post-IPO. The company has increased its restaurant count from 162 at IPO to 775 now. The stock continues to enjoy a high valuation and has been growing its sales at just over 15% since 2019.
The stock also recently received an upgrade from Morgan Stanley, acquiring an Overweight rating from the prior Equal Weight. The investment bank is optimistic about a restaurant recovery this year, though the size of the recovery may not be that significant.
Overall TXRH ranks 1st on our list of the high growth restaurant stocks for 2025. While we acknowledge the potential of TXRH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as TXRH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
