Ahead Of The Bell: Restaurants

NEW YORK (AP) — An analyst said Monday that she prefers stocks of companies such as Panera Bread Co., Chipotle Mexican Grill Inc. and Starbucks Corp. because they are benefiting from a strengthening upper-middle-class consumer.

Most restaurant stocks have risen this year on better-than-expected earnings, but the next leg up "will likely need to stem from improved sales trends," William Blair & Co. analyst Sharon Zackfia wrote in a note to clients.

"We prefer to invest on a trend that is already in evidence - a strengthening upper-middle-class consumer (likely the result of an improved stock market)," Zackfia said.

Zackfia also thinks The Cheesecake Factory Inc. and P.F. Chang's China Bistro Inc. could fare well during the holidays since both companies tend to have restaurants located in upscale shopping malls.

Starbucks rose 17 cents to $19.88 in Monday premarket trading, while Cheesecake Factory climbed 33 cents to $19.61. Shares of Chipotle, Panera and P.F. Chang's were unchanged.