Market Overview

Seven Fast Food Stocks Near 52-Week Highs

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By and large, fast food restaurants continue to perform well as cost-conscious consumers still try to stretch a buck as they eat out. Though these companies also face higher commodity and production costs, some have been able to offset these costs with strategic price increases.

Here are seven fast food stocks that are now trading near their 52-week highs.

Chipotle Mexican Grill (NYSE: CMG): Better-than-expected first-quarter revenues rose 24.3 %, driven by new restaurant openings and growing same-store sales. Chipotle sports a strong balance sheet, consistent earnings, healthy cash flow and international expansion, but margins remain under pressure due to food cost inflation. Shares closed today at $284.11 after rising more than 33% since the beginning of the year. The stock has outperformed the restaurant industry average since the beginning of the year.

Domino's Pizza (NYSE: DPZ): The share price has risen more than 35% in the past month, following the report of better-than-expected first-quarter earnings. And recently, the company launched its first extended national carryout promotion: Monday through Wednesday deals. Domino's stock has outperformed competitor Papa John's (NASDAQ: PZZA) and the restaurant industry average since the beginning of the year. Analysts on average recommend buying DPZ.

Krispy Kreme Doughnuts (NYSE: KKD): The company's best quarterly earnings report in seven years prompted the stock to leap to a new multiyear high of $8.66 per share yesterday. Profits more than doubled and revenues jumped 14%, due in part to price increases. Krispy Kreme has a 50% long-term earnings per share forecast, as well as a PEG ratio of 0.6. Note that competitor Dunkin' Donuts has an impending initial public offering.

McDonald's (NYSE: MCD): The world's largest fast-food company has announced that it will remodel its stores in the United States with an eye toward increasing sales. Coffee sales and growth in Asia continue to be drivers for the stock. The share price hit a multiyear high of $83.08 yesterday after climbing more than 11% in the past three months. McDonald's has a dividend yield of 2.0% and a return on equity of 34.3%. The consensus recommendation of analysts remains to buy the stock.

Sonic (NASDAQ: SONC): The operator of the nation's largest chain of drive-in restaurants recently announced that same-store sales increased by 4% to 6% for the first two months of its third fiscal quarter. It also completed a $500 million refinancing transaction, and insiders bought more than 180K of shares in March and April. The stock is down less than a buck from the 52-week high of $11.86 per share. Sonic's return on equity is 44.1%.

Wendy's/Arby's Group (NYSE: WEN): Like McDonald's, beverage sales and growth in Asia are drivers for this stock as well. Wendy's said it would reenter the Japanese market with a store in Tokyo expected to open later this year. Trading mostly between $4.75 and $5.15 per share since February, the stock is struggling to return to the 52-week high of $5.22. The company has a 17.3% long-term earnings per share growth rate forecast, as well as a dividend yield of 1.4%

Yum! Brands (NYSE: YUM): The operator of KFC, Pizza Hut, Taco Bell and other popular chains has more than 3,900 stores in China, where same-store sales grew 13% in the first quarter. The company also has raised its dividend every year since it was initiated in 2004. Shares reached a multiyear high of $56.98 last week. Yum! Brands has a return on equity of 85.8% and a long-term earnings per share forecast of 12.8%. It also has increased its cash on hand in recent reporting periods.

Fast Food ETFs

If exchange traded funds are more your thing, here are five ETFs with significant exposure in fast food stocks:

PowerShares Dynamic Food & Beverage Portfolio (NYSE: PBJ): +10.3% year to date

Vanguard Consumer Discretionary Index Fund (NYSE: VCR): +6.3% year to date

Consumer Discretionary Select Sector SPDR Fund (NYSE: XLY): +6.2% year to date

PowerShares Dynamic Leisure & Entertainment Portfolio (NYSE: PEJ): +5.7% year to date

PowerShares Dynamic Consumer Discretionary Sector Portfolio (NYSE: PEZ): +5.5% year to date

 

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