So I noticed the other day that The Wall Street Transcript had put out some interviews with stock experts all about the future of restaurant chains. It was interesting to see how the professionals’ thoughts lined up with mine. There are six interviews with various experts in the food and restaurant sectors, and here are some quotes and information about three of them:
Chris O’Cull is part of the consumer team at SunTrust Robinson Humphrey, Inc., where he concentrates on the restaurant sector. This interview is from 07/07/2010:
“Over the past few weeks, stocks have come under quite bit of pressure, so we think a lot of investors are looking for investment ideas. Casual dining will be one of those places, but there will also be interest in the regional fast food names because of the valuations. And so we would expect to see growing interest in those areas over the next several weeks. […] Some of our favorite stories are names like DineEquity (DIN), Jack in the Box (JACK) and Wendy’s/Arby’s Group (WEN). Those are our favorite stories right now.”
Keith Siegner is a Vice President with Credit Suisse. This interview is from 07/07/2010:
“We believe investors should be focusing on large consumer multinationals with strong brands, high returns and free cash flows, international growth opportunities and the wherewithal to invest in comps in the U.S. […] Our two favorites right now are Yum! (YUM) and Starbucks (SBUX).”
Nicole Miller Regan is a Managing Director and Senior Research Analyst at Piper Jaffray & Co., where she focuses on the restaurant sector. Her interview was conducted on 07/09/2010:
“The guys that are discounting are still underperforming, that’s exactly what it comes down to. They are underperforming in total comps. So I guess the message is when you discount, you are still not making up for it in traffic. […] At the moment, we like, in [quick service restaurants], Sonic (SONC), and McDonald’s (MCD) and Burger King (BKC). We would say, ‘Don’t sell your winners’ – Panera (PNRA) and Starbucks (SBUX) have done so well, keep those in the portfolio. Then on the high end, we really like McCormick (MSSR). And we even put P.F. Chang’s (PFCB) in that basket, because they have 15% to 30% of their transactions tied to the corporate traveler.”
This issue of The Wall Street Transcript has three more interviews with experts in the field, including the Senior Vice President of Investor Relations for Yum! Brands, the world’s largest restaurant company. If you liked these excerpts and would like to read the full versions as well as the rest of the interviews, you can find them here.