Restaurant stocks may have a place in your portfolio, as the group gained 35.8% this year to outperform the S&P 500's 18.6% increase.
The retail-restaurants industry group, containing 54 stocks, is ranked No. 28 out of the 197 IBD industry groups. Here are five restaurant stocks to fill investors' appetites for growth stocks.
Restaurant Stocks Hit Buy Points
Texas Roadhouse shares tapped the 116.72 buy point of a cup base on Monday. The buy zone goes up to 122.56. The stock's move came after Piper Sandler initiated coverage on the restaurant stock with an overweight rating and a 126 price target.
The stock climbed from the bottom of the base after competitor Darden Restaurants posted mixed earnings results and issued fiscal 2024 guidance, on June 22.
Texas Roadhouse posted 19% Q1 quarterly earnings growth, up from 17% but down from 24% two quarters ago.
Analysts expect 18% full-year earnings growth this year and 16% next year.
Meanwhile, Darden Restaurants stock is above the 5% buy zone reaching to 163.70 of a flat base with a 155.90 buy point. Shares broke out in mid-May and have traded in or above the buy zone ever since.
The stock initially tumbled after it reported higher-than-expected profit, but missed slightly on sales in its May-ended quarterly results. Shares started rebounding the next day, as investors digested the report and liked its LongHorn Steakhouse strong 7.1% same-store sales growth.
Darden has over 1,850 restaurants with brands including Olive Garden, LongHorn Steakhouse, Seasons 52, Capital Grille and Bahama Breeze.
Restaurant Stock Hits Buy Point
Leaderboard Leaders watchlist stock Chipotle Mexican Grill got a 1.2% lift on Tuesday to hit the 2,139.88 buy point of a flat base. Shares are in the buy zone reaching to 2,246.87.
Tuesday's boost came after the company announced it will open restaurants in Dubai and Kuwait early next year, before expanding further across the Middle East.
Shares rose 3.5% to retake the 50-day moving average on Monday, after Morgan Stanley and Oppenheimer raised their price targets on the stock.
The burrito and Mexican fast-casual restaurant chain currently owns and operates over 3,200 locations in North America.
Chipotle plans to open more than 255 new restaurants this year. Its long-term target is 7,000 North American locations. CMG ranks No. 1 in the restaurant group.
Analysts expect impressive 36% full-year profit growth this year and 20% next year.
New Joints In Town Sizzle
Mediterranean fast-casual restaurant stock Cava Group popped 7.1% on Tuesday, to lift it above the buy zone of an IPO base with a 47.89 entry.
After much anticipation, Cava had its initial public offering, or IPO, on June 15. Expectations remain high, as it strives to follow in Chipotle's footsteps. It has even been dubbed "the next Chipotle," according to a Wall Street Journal article on Monday.
The company is not yet profitable, but its most recent quarterly loss was the smallest since going public. Cava currently has over 260 locations and plans to have more than 1,000 U.S. locations by 2032.
Kura Sushi is above the 20% profit zone of a tight, sideways trending base with a 73.74 buy point. KRUS rocketed 17.4% in huge volume on July 7, after reporting better-than-expected May-ended quarterly EPS, but a miss on sales.
Management raised its expected fiscal 2023 sales numbers. Lastly, Kura has more than 500 locations across Japan, Taiwan and the United States.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.
