We recently published a list of Top 10 Restaurant Stocks to Buy Under $20. In this article, we are going to take a look at where Portillo’s Inc. (NASDAQ:PTLO) stands against other top restaurant stocks to buy under $20.
The Impact of Trump’s Tariffs on the Restaurant Industry
Restaurant stocks are showing volatility amid Trump’s tariff impositions across various sectors. On April 7, CNBC reported that while US stocks are tumbling due to the effects of high tariffs on the import of goods from key trading partners, analysts do not anticipate the tariffs to hit most restaurant stocks directly. However, inflation is expected to follow behind, fueled by expert and investor fear of an impending recession. This may put pressure on the spending capacity of consumers, resulting in an economic downturn.
CNBC reported that UBS analyst Dennis Geiger said the following in a note to clients:
“We view the direct cost impact of tariffs on restaurants as manageable, with a focus on select commodity costs, but see the bigger risk as incremental pressure on consumer spending and industry demand.”
CNBC also reported that investor concerns affected restaurant stocks across all sectors. Fast food restaurant chains have historically shown the most resilience during recessions, as consumers looking for cheap dining options typically level down from fast-casual or full-service diners and eateries to fast food options. However, the drop in consumer spending witnessed last year saw fast food restaurants hit hard, as low-income consumers cut their spending to this sector, visiting them less frequently. High-income consumers, on the other hand, continued with their usual dining habits, creating a gap that negatively affected fast food companies. Quick-service restaurants thus underwent same-store sales declines.
How Are High-Income Consumers Behaving?
On March 8, Mario Carbone, Major Food Group chef and co-founder, appeared on CNBC’s ‘Power Lunch’ to discuss the effects of Trump’s tariffs on the food industry and how high-end consumers are behaving in the sector. Talking about New York, he said that the numbers are booming, going above their pre-Covid benchmarks. New York is thus telling us that everything is good, and there is no fear right now in dining in the luxury sector. Stats are up, and restaurants are packed, with consumer energy through the roof. As of right now, there are no signs of slowing at all if one evaluates the spending and trends in restaurant reports.
However, Carbone said that inflation hits the food and restaurant industry just like everyone else. The luxury food sector is responsible to the customer for bringing in the best ingredients for every meal, which is why it has no choice but to pass the effects on to the consumer in case such trends materialize.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 20 restaurant stocks under $20 as of April 13, 2025, and chose the top 10 most popular among hedge funds as of Q4 2024. The list is ordered in ascending order of hedge fund sentiment. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A customer biting into a freshly prepared char-grilled burger, with crinkle-cut French fries and a chopped salad in the background.
Portillo’s Inc. (NASDAQ:PTLO)
Share Price: $12.00
Number of Hedge Fund Holders: 22
Portillo’s Inc. (NASDAQ:PTLO) is a fast-casual restaurant company that serves Chicago Street food in multichannel restaurants. The company reported a total revenue of $184.6 million for fiscal Q4 2024, while full-year revenue was $710.6 million. Restaurant-level adjusted EBITDA for fiscal Q4 2024 was $45.2 million and $168.1 million for the full year, with a margin of 23.7%.
The addition of kiosks at all of the company’s restaurants supported top-line momentum in the quarter, driving a comp lift of more than 1% through the mix. Management is continuing to explore the role of the kiosks in its business.
Portillo’s Inc. (NASDAQ:PTLO) is also continuing to expand its operations and plans to open 12 new restaurants in 2025. This includes its first restaurant in Georgia, while most of the rest will be in Texas. A majority of the openings will be concentrated in the year’s second half, and its strong pipeline is expected to lead to a more balanced 2026.
Stifel Nicolaus analyst Chris O’Cull maintained a Buy rating on Portillo’s Inc. (NASDAQ:PTLO) on March 3 and set a price target of $17.00.
White Brook Capital Partners stated the following regarding Portillo’s Inc. (NASDAQ:PTLO) in its Q4 2024 investor letter:
“Portillo’s Inc. (NASDAQ:PTLO) is up over 20% so far this year. On January 14, the Company preliminarily announced same store sales growth and gave supportive guidance for 2025 driving much of that stock improvement. But the even more important news should have been picked up during 2024, and was simply overlooked. During the third quarter, they announced they would explore financing the building for their new stores, rather than leasing the ground, but financing the building themselves. The move meant that the company can grow more quickly while also allowing for free cash flow after growth investments to begin to flow to the bottom line. This is exactly the scenario outlined in my bull case write-up last year. We were obviously too early in establishing our position in 2024, but this is the setup that we outlined in our thesis, and one that, as they execute, should prove lucrative.”
Overall, PTLO ranks 5th on our list of the top restaurant stocks to buy under $20. While we acknowledge the potential for PTLO 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PTLO but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
