NEW YORK (TheStreet) -- China Lodging Group (HTHT), Country Style Cooking Restaurant Chain (CCSC), Morton's Restaurant Group (MRT), Luby's (LUB) and O'Charley's (CHUX) are five restaurant stocks with potential upside of 35%-47%. Being analysts' favorites, most of these stocks have no sell ratings.
An analyst at Jefferies observed improving sales in restaurant chains, attributing the trend to perk up in consumer spending from the recessionary lows. The Michigan Consumer Sentiment Index for February stood at 77.5, up from 74.2 recorded in January.
Personal income and spending have improved and with unemployment stabilizing in the past three months, the restaurant industry is likely to add jobs at a rate of 2.4% in 2011, compared to 1.8% by the national economy.
A National Restaurant Association report says the U.S. restaurant industry is estimated to record $604 billion in sales, an increase of 3.6% from 2010 levels. The association believes that despite challenges like soaring food prices, the restaurant industry is poised for a bright 2011, with a major portion of revenue generated from international visitors, drawn mainly from China, South Korea, Brazil, Japan, and Australia, which have increased by double digits from 2009 levels.
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