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Wingstop Among Restaurant Stocks That Could Fly High, While Others Are Grounded

April 20, 2021 4:15 pm
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Wingstop Among Restaurant Stocks That Could Fly High, While Others Are Grounded

While investors may be wondering if the rally in full-service restaurant stocks is over and if it is time to invest in quick-service restaurant stocks, this is not an “either/or decision,” according to Stephens & Co.

The Wingstop Analyst: James Rutherford maintained an Overweight rating for Wingstop Inc (NASDAQ:WING), with the price target unchanged at $172.

The Wingstop Thesis: Poor weather conditions in February were favorable for delivery and drive-thru restaurant stocks, Rutherford said in the note.

This was reflected in Wingstop’s first-quarter comps, which handsomely surpassed expectations, he added.

Investors seem to be underestimating the positive impact of the reopening on drive-thru stocks, the analyst noted.

The Stephens & Co. analyst placed the following are full-service, drive-thru, delivery and takeout restaurants in these categories:

Full-service stocks with significant multiple expansion potential:

  • BJ's Restaurants, Inc (NASDAQ:BJRI)
  • Brinker International, Inc. (NYSE:EAT)
  • Denny's Corp (NASDAQ:DENN)
  • Ruth's Hospitality Group, Inc. (NASDAQ:RUTH)
  • Kura Sushi USA Inc (NASDAQ:KRUS)
  • Darden Restaurants, Inc. (NYSE:DRI)

Full-service stocks that seem to be too expensive

  • Cheesecake Factory Inc (NASDAQ:CAKE)
  • Texas Roadhouse Inc (NASDAQ:TXRH)
  • Chuy's Holdings Inc (NASDAQ:CHUY)

Drive-thru stocks with potential

  • McDonald’s Corp (NYSE:MCD)
  • Wendy’s Co (NASDAQ:WEN)

Delivery/takeout stocks with potential

  • Papa John's Int'l, Inc. (NASDAQ:PZZA)
  • Wingstop Inc (NASDAQ:WING)

(Photo: Wingstop)

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