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This week, in our focus on the winning analysts in each industry category from our

Analyst Rankings -- Equity 2000

, we profile the top analysts tracking restaurants. Next week we'll look at packaged foods. (Our last focus was on

casinos and gaming.)

The economy may be slowing, but that shouldn't hurt the restaurant sector, according to our top two ranked analysts.

In busy two-career families, dining out is increasingly seen less as an extravagance that can be done away with in lean times than as a necessary convenience that offers a certain kind of value in the time it saves. This, anyway, is the view of No. 1-ranked Peter Oakes of

Merrill Lynch


And having become such an integral part of many people's lives, the restaurant-going habit won't likely be abolished just because of a few months of bad economic news, he says.

Both Oakes and No. 2-ranked Joe Buckley of

Bear Stearns

agree that while demand may soften somewhat if the economy continues to cool, the group is well-positioned from a supply standpoint. Despite strong performance over the past few years, restaurant operators on the whole have been slow to add new units, so there is little danger of oversupply.

Oakes and Buckley see casual dining as a lasting trend, and both choose restaurants in this category as their top picks. Oakes favors

Outback Steakhouse


, which he says earns consistently high marks for value from diners. He also notes that the restaurant chain's stock has a lower valuation than its peers.Buckley prefers

Applebee's International


, which he says is cheap on a relative basis and "offers investors a combination of the growth potential of the casual-dining segment and the defensive business model of the fast-food segment." But while Oakes singles out Outback as his only buy recommendation, Buckley also likes

Darden Restaurants


, the Olive Garden and Red Lobster operator, as well as fast-food name

Wendy's International




Rate Their Stock Picks:

Which stock do you like best?

Oakes: Outback Steakhouse

Buckley: Applebee's

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