3 Restaurant Stocks That Will Be Delicious Buys This Holiday Season

Stocks to buy

The holiday has always been a time for reflection, celebration and gratitude for Americans. This is also a time when investors can buy restaurant stocks that can potentially rise in value during this holiday season as consumers take advantage of deals like Black Friday and Cyber Monday. This yearly event has helped companies increase sales during this period, mostly when consumers have high disposable income.

While the economy is still licking its wounds from the effects of the pandemic, elevated interest rates, and high inflation, millions of Americans have limited disposable income. However, the latest United States jobs report shows that many jobs have been added to the economy, fuelling the potential growth of consumers with discretionary spending. This increases the potential of some companies to take advantage of the influx of shoppers celebrating the Thanksgiving season.

Restaurant Stocks to Buy: Restaurant Brands International Inc. (QSR)

Source: Tony Prato / Shutterstock.com

Restaurant Brands International Inc. (NYSE:QSR) is a quick-service restaurant conglomerate specializing in food products and coffee. The company owns famous brands like Tim Hortons, Popeyes and Burger King. It operates into two segments of the food industry: TH, which offers its coffee, expresso-based specialty drinks, donuts and teas under Tim Horton’s brand; BK, for its Burger King Brand that offers fast food burgers, chicken, and fries; and its FHS segment for its Firehouse subs brand that offers meats, cheese, salads and signature dishes.

The company has performed exceptionally well in the last two quarters, where its earnings beat analyst estimates by 19.05% and 11.84%, respectively. Its consolidated comparable sales also grew 9.6% in the second quarter. Analysts rate QSR as a “Buy” based on 26 analyst recommendations. With the upcoming holiday season, Restaurant Brands is in a great position to cater to hungry shoppers who want a quick meal for their celebrations. If you’re looking for restaurant stocks to add to your holiday portfolio, QSR might be one of your best bets.

U.S. Foods Holding Corp. (USFD)

Source: Tatjana Baibakova / Shutterstock

While not a restaurant stock per-se, U.S. Foods Holding Corp. (NYSE:USFD) is one of the leading food service distributors in the U.S. that markets, sells and distributes a variety of ingredients to the food industry. Moreover, the company markets and distributes dry-food fresh and frozen ingredients to restaurants, including a variety of seafood, meats, dairy and supplies. Besides restaurants, the company also supplied hospitals, nursing homes and other business establishments. USFD has a network of more than 6,000 suppliers, and it has roughly 70 distribution facilities that provide its clients with a coordinated network of delivery trucks that supply these ingredients across the U.S.

U.S. Food Holding met analyst expectations in its last financial quarter. Adjusted EBITDA grew 17.14%, while net sales also increased by 2.1% YoY. Analysts rate USFD as a “Strong Buy” with a $51.75 mean target. Due to the company’s strong performance and momentum, it also raised its EBITDA guidance to $1.54 billion for fiscal year 2023. USFD is in a great position to benefit from the expected surge of shoppers looking for quality food during celebrations for the upcoming holidays. That is why we think the company is one of the best restaurant stocks to consider adding to your portfolio.

Costco Wholesale Corporation (COST)

Source: ilzesgimene / Shutterstock.com

Last on our list is Costco Wholesale Corporation (NASDAQ:COST). While Costco isn’t a restaurant, many of its customers are! Costco operates in a membership-only warehouse shopping and e-commerce sales business model that is best known for carrying low-cost, top-quality products in bulk. This includes a variety of meats, dairy, fruits and vegetables. Additionally, COST carries an incredibly large selection of dry goods, including spices, pasta, and grains & rices; all of which benefit large families and restaurants alike.

Interestingly, a major part of its operating profit comes from its membership fees for consumers. This strategy has made COST one of the go-to retailers of consumers who love to purchase quality products at a discount. The company currently has 862 warehouses in operation and employs 301,000 employees.

With its successful business model, the company has been constantly growing its earnings while beating analyst expectations for the last three quarters. Analysts recommend COST as a “Strong Buy” with a mean target of $602.50. Costco’s strategic marketing campaigns like pre-ordered Thanksgiving meals and Black Friday Sales event, coupled with its already low costs, makes it attractive to both budget-centric consumers, restaurants and investors alike.

On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.

Articles You May Like

Economic Armor: 7 Defensive Consumer Stocks to Weather Any Storm
The AI Stocks That Will Make You Money In 2024
If You Can Only Buy One Hydrogen Stock in December, It Better Be One of These 3 Names
3 Semiconductor Stocks That Could Be Multibaggers in the Making
3 Stocks That Topped Q3 Earnings and Still Have Room to Run