- Stephens analyst James Rutherford said in a note that fast food restaurant sales performed markedly better than casual diners in an inflationary scenario.
- Given the current environment, with gas prices over $4 per gallon, up over 20% from the start of the year, the analyst recommends exposure to Wendy's Co (NASDAQ:WEN), Papa John's International Inc (NASDAQ:PZZA), and Chipotle Mexican Grill Inc (NYSE:CMG).
- Quick service comps meaningfully outperformed full service in 2008 and 2009 because of the stronger value proposition of fast food compared to casual dining, the analyst opined.
- With the developments in Ukraine exacerbating the inflation in gas prices, the analyst has opted for Wendy's, Papa John's, and Chipotle as stocks to consider for a "Consumer Downturn" scenario.
- Rutherford believes there is a good growth path in front of Wendy's, Papa John's would likely fare well and Chipotle to be fairly insulated from a downturn in consumer spending.
- Price Action: WEN shares are higher by 1.88% at $21.46, PZZA higher by 4.33% at $98.25, and CMG up by 7.15% at $1,407.47 on the last check Wednesday.
