This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Restaurants Still Strong, Unbowed After Recession

Shares of DENN recently broke through the $5 level for the first time since 2007. That might draw the name some more institutional interest, if it can hold above $5.

DENN Chart DENN data by YCharts

Cracker Barrel (CBRL - Get Report), embroiled in an activist fight with Biglari Holdings (BH) has also been on fire. The company is now trading at an all-time high, after reporting a better than expected fourth quarter last week.

CBRL Chart CBRL data by YCharts

Ruby Tuesday (RT - Get Report) has also had its share of challenges, and this real-estate rich name nearly imploded in 2009. I've been impressed with the newer menu, but that should never be the sole reason to take a position in a restaurant name, given the highly competitive nature of the business, particularly in the casual dining arena. Part of putting consumers in the seats has to do with advertising; we'll see if Ruby Tuesday is successful with its current campaign.

RT Chart RT data by YCharts

Perhaps surprisingly, the best performing restaurant stock year-to-date (market cap greater than $400 million) has been Popeye's chicken parent AFC Enterprises (AFCE), which is up 70% year to date. Among the worst performers, essentially flat year to date is phenomenon Chipotle (CMG - Get Report), which was up nearly nine-fold between early 2009 and this past April.

AFCE Chart AFCE data by YCharts

There has been a lot of money made in this sector over the past three or four years, but it appears as though the rules may have changed. Despite the bad economic conditions during most, if not all of that period, consumers have not seemed to give up eating out.

I do admit, however, that the specter of rising commodity costs still concerns me for the sector.

At the time of publication, the author was long DENN, RT and BH.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AFCE $52.44 0.00%
CBRL $146.50 0.04%
CMG $719.23 -0.79%
DENN $11.28 0.89%
RT $6.74 -1.46%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs