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5 Restaurant Stocks With Upside

2. Luby's is a holding company engaged in the restaurant business with culinary contract services and franchise operations. The company operates Luby's cafeterias (96), Fuddruckers and Koo-Koo-Roo stores (59), and culinary contract services (19), as of second quarter 2011.

Both the analysts covering the stock rate a buy and estimate 38.8% upside to $6.8 from current levels.

For 2011 second quarter, revenue from restaurant sales grew $21 million, or 41.3% to $71.8 million from the same quarter a year ago. On a year-over-year basis, same-store sales from cafeterias rose 2.7%, culinary contract services revenue was up 5.7%, and Fuddruckers locations added $19.6 million to total restaurant sales.

Looking ahead, the company said it is well positioned for profitable growth. Although, food commodity cost increases could have a material adverse impact on margins, significant increases in guest numbers, and a favorable menu mix will support margins and top-line growth. The company believes same-store sales and effective cost management will determine 2011 profitability. Specifically, Fuddruckers is likely to be accretive to Luby's overall profitability.

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