Restaurant sales

4 solid stocks to buy when restaurant sales surge in September

The Delta variant of COVID-19 has been a cause for concern for the past two months, but it hasn’t shaken people’s confidence much. As the economy continues to reopen, people are stepping out of their homes with confidence.

This has seen the catering industry gradually recover, with sales rising. And with the festive season approaching, people are likely to plan vacations and eat out, which is further likely to help the restaurant industry.

Restaurant sales increase in September

The US Census Bureau reported on October 15 that retail sales rose 0.7% in September. Spending rose in almost every section, with restaurant sales rising 0.3% month-over-month in September. Year-over-year spending at food service establishments jumped 29.5%.

The monthly rise might not be large given that many still fear the Delta variant of the virus. However, the industry appears to be on track for a steady recovery after the blow it suffered last year. That said, food and beverage sales rose 0.7% month over month.

With millions vaccinated, restaurants are once again attracting footfall. In fact, despite an increase in COVID-19 cases during the summer, sales have soared. Consumer spending at restaurants jumped 32% in the second quarter of 2021 from a year ago, according to a separate report from the NPD Group. The third quarter should also be impressive given that cases have started to decline during this period and the government has also eased restrictions further.

The restaurant industry is poised to grow

According to a report from the National Restaurant Association (NRA) published last month, the Delta variant may slow the recovery of the restaurant industry to some extent, but will still be higher than last year. The report mentions that the annual sales of American restaurants are expected to increase by 19.7% compared to 2020 to reach $789 billion this year.

According to an article by Restaurant Business Online, citing an NRA report, restaurant sales in the United States are rebounding to normal after falling 19.2% last year, which was also the most difficult year. for industry.

Additionally, travel is on the rise, with people planning vacations ahead of the holiday season. Thus, restaurant sales are expected to increase further in the coming months.

Our choices

Given the situation, the ideal would be to invest in restaurant stocks. We shortlisted five restaurant stocks, each carrying a Zacks rank of No. 1 (strong buy) or 2 (buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Denny’s Corporation DENN is one of the largest catering companies, operating moderately priced restaurants: Denny’s, Hardee’s, Quincy’s, El Pollo Loco, Coco’s and Carrows.

The company’s expected earnings growth rate for the current year is greater than 100%. The Zacks consensus estimate for current-year earnings has improved 4% over the past 60 days. Denny’s Corporation sports a #1 Zacks rank.

Darden Restaurants, Inc. DRI is one of the largest casual dining restaurant operators in the world. The company is present in the United States and Canada with more than 1,700 restaurants.

The company’s forecasted earnings growth rate for next year is 76.6%. The Zacks consensus estimate for current-year earnings has improved 2.3% over the past 60 days. Darden Restaurants has a #2 Zacks rank.

Papa John’s International, Inc. PZZA operates and franchises delivery and pizza delivery restaurants in the United States and other specific international markets. Its food service and delivery restaurants operate under the Papa John’s brand.

The company’s expected earnings growth rate for the current year is greater than 100%. The Zacks consensus estimate for current-year earnings has improved 0.6% over the past 60 days. He has a #2 Zacks rank.

Dave & Buster’s Entertainment, Inc. PLAY is one of North America’s leading owners and operators of high-volume venues that combine dining and entertainment for adults and families.

The company’s expected earnings growth rate for the current year is greater than 100%. The Zacks consensus estimate for current-year earnings has improved 46.7% over the past 60 days. He has a #2 Zacks rank.

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

Darden Restaurants, Inc. (DRI): Free Inventory Analysis Report

Denny’s Corporation (DENN): Free Stock Analysis Report

Papa John’s International, Inc. (PZZA): Free Stock Analysis Report

Dave & Buster’s Entertainment, Inc. (PLAY): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research