FilippoBacci
Baird Restaurant survey December data showed acceleration in the industry fueled by favorable weather conditions and greater sales, and the brokerage firm lists six stocks with upside potential.
A sample of $14B in annual sales showed comparables up 8% in December, after being up 4% in November and 2% in October. For the fourth quarter, same-store sales averaged 4.6%, compared to 3.6% in the third quarter, the report said.
“We generally had assumed industry comps in November-December would be near/below October levels,” analysts said. “We think calendar-Q4 domestic comps projections are attainable or beatable in many cases, with the setup potentially best for those that entered Q4 with strong brand momentum that was not fully factored into our projections, or those with outsized exposure to favorable calendar/weather comparisons.”
Comparables for the first week of January, however, came in below the averages for December and the fourth quarter, Baird analysts said. “We would not be surprised to see the broader comps trajectory remain sluggish in upcoming weeks as the industry laps difficult year-ago weather comparisons.”
These are the companies with the greatest potential for upside to domestic comparables projections:
- Wingstop Inc. (NASDAQ:WING)
- CAVA Group Inc. (CAVA)
- Portillo’s Inc. (PTLO)
- Dutch Bros Inc (BROS)
- Chipotle Mexican Grill Inc. (CMG)
- Texas Roadhouse Inc. (TXRH)
These are stocks with some downside risk: