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

Slimmer Menu for Restaurant Stocks

NEW YORK (TheStreet) -- The bull market in restaurant stocks may finally be showing signs of fatigue.

The sector has been on fire for much of the past five years, with average annual returns during that period for the 40 or so restaurant stocks I track at above 40%. But with the average price-to-earnings ratio above 33, it may be time for a breather.

Year to date, the restaurant stocks I track are up an average of 1.3%, which still beats the S&P 500 (+0.85%), but is behind the Russell 2000 (+2.1%), which may be a more appropriate benchmark given the restaurants' average market capitalization.

The big winner year to date isn't Chipotle (CMG), Panera (PNRA) or any of the other category killers, but rather Famous Dave's (DAVE - Get Report), best known for its ribs.

Famous Dave's is up almost 40% year to date, and has surged recently on better-than-expected quarterly earnings and the announcement that Ed Rensi, former president of McDonald's USA, will be taking the helm as CEO.

The stock, which had been languishing in obscurity, now trades at an all-time high. Part of that obscurity is due to the company's relatively small market cap, which is just under $200 million. That's tiny considering the company's 194 locations (54 company-owned, 140 franchised).

Famous Dave's has also reduced shares outstanding by almost 30% since 2007 through buybacks, giving it a relatively small float.

DAVE ChartDAVE data by YCharts

1 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
Submit an article to us!
SYM TRADE IT LAST %CHG
DAVE $28.77 -0.07%
AAPL $129.33 0.29%
FB $78.93 -0.08%
GOOG $541.90 0.74%
TSLA $230.99 2.20%

Markets

DOW 18,092.98 +68.92 0.38%
S&P 500 2,117.61 +9.32 0.44%
NASDAQ 5,031.8070 +26.4160 0.53%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs