NEW YORK (TheStreet) -- China Lodging Group (HTHT - Get Report), Country Style Cooking Restaurant Chain (CCSC), Morton's Restaurant Group (MRT), Luby's (LUB - Get Report) 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.

5. China Lodging Group, through its subsidiaries, operates economy hotel chains in China. The hotel company has 243 leased-and-operated hotels and 195 franchised-and-managed hotels, as of Dec. 31, 2010. Moreover, as of the same date, it has 9 leased-and-operated hotels and 93 franchised-and-managed hotels under development.

The 10 analysts covering the stock recommend a buy. On average, analysts estimate a 34.7% upside to $25.0 from current levels.

For the latest fourth quarter, the company reported earnings of $5.3 million, or 9 cents per share, as compared to $3.0 million, or 6 cents per share in the year-ago quarter. Also, revenue for the period soared 29.2% to $72.5 million. During the quarter, the company launched 70 hotels, closing 2010 with 438 hotels in 65 cities across China. Earnings for 2010 stood at $32.7 million on revenue of $278.5 million. Meanwhile, RevPar for 2010 increased 12% year-over-year.

Heading into first quarter 2011, China Lodging expects net revenue of $62.4 to $65.5 million, up 20%-26% from the first quarter of 2010. Revenue growth for full-year 2011 is expected between 34% and 38%, compared to $278.5 million recorded in 2010. Furthermore, to leverage Chinese consumers growing penchant for travel, the company plans to add 200 new hotels.

As per a research report China Tourism Industry Forecast to 2012, domestic travel is likely to boom in China during the period 2011-2013. Meanwhile, pegs online travel bookings in China at $15.4 billion in 2011, zooming from $1.5 billion recorded in 2006. China--the world's fourth top destination for tourism--plans to build more hotels and motels across the country to meet rising demand.

4. Country Style Cooking Restaurant Chain (CSC Cayman) is a quick-service restaurant chain in China operating through CSC China and its further subsidiaries. The company has a total restaurant count of 131, as of Dec. 31, 2010.

Of the six analysts covering the stock, 17% recommend a buy while 67% rate a hold. On average, analysts foresee 37.2% upside to $23.2 from current levels.

For 2010 fourth quarter, revenue was up 50.5% to $31.9 million, compared to the year-ago period with comparable restaurant sales growing 10.6% during the same period. Meanwhile, net income for the quarter escalated 78.2% to $2.1 million, or 8 cents per share, from the same period a year ago. Key driver of revenue growth was the launch of 17 new restaurants during the quarter.

For full-year 2010, total revenue surged 50.9% to $113 million as compared to the earlier year. Also, net income was up 39.3% to $9.5 million, or 43 cents per share, from the prior year.

For the fourth quarter and full-year 2010, the Halter USX China Index, which includes CSC Cayman and China Lodging Group as two of its constituents, gained 1.8% and 10.7% respectively. The Halter Financial Group created the HXC Index--comprising China-focused U.S. listed companies--in response to the unique economic opportunities emerging in China, as well as the current dynamics in the U.S. capital markets.

For full-year 2011, the company's revenue guidance is between $167.5 and $182.7 million, indicating year-over-year growth rate of approximately 47%-61%. In the year ahead, the company plans to launch 65 to 75 new restaurants.

3. Morton's Restaurant Group owns and operates restaurants under the brands Morton's The Steakhouse (Morton's), Trevi (Trevi), and Bertolini's Authentic Trattorias (Bertolini's).

Of the five analysts covering the stock, 60% recommend a buy while the remaining rate a hold. The stock has no sell ratings. On average, analysts estimate a 38.0% upside to $9 from current levels.

For the latest fourth quarter, the company reported 6.2% increase in revenue to $84.1 million from $79.2 million in the year-ago period. The company swung to a GAAP net income of $5.3 million, or 30 cents per share, as compared to a net loss of $66.9 million, or $4.21 per share in 2010 fourth quarter. Comparable restaurant revenues for the company's steakhouses were up 5.3%.

Looking ahead, Piper Jaffray says with almost two-third of the company' sales connected to corporate spending, it will be able to reap huge benefits from an improving travel and entertainment spending environment. A report from the National Business Travel Association forecasts U.S. business travel spending to soar by 6.7% in the first quarter of 2011 as against the 2010 period.

For the first quarter of 2011, the company estimates revenue between $81 and $83 million with comparable sales to increase by almost 6%-8% from the year-ago period. Net income from continuous operations per share is pegged at 13-15 cents. For 2011, revenue is forecast between $318 and $323 million, and per share net income from continuous operations at 44-49 cents.

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.

1. O'Charley's is a multi-concept restaurant company owning and operating three restaurant concepts under the O'Charley's, Ninety Nine and Stoney River Legendary Steaks trade names. The company operates O'Charley's restaurants at 221 locations, Ninety Nine Restaurants at 106 places, Stoney River Restaurants at 11 locations, and franchises or joint ventures of the O'Charley's restaurants at 9 places, as of Dec. 26, 2010.

Of the four analysts covering the stock, 25% recommend a buy while the remaining rate a hold. There are no sell ratings on the stock. On average, analysts estimate 47.1% upside to $9 from current levels.

For 2010 fourth quarter, the company's same-store sales at Ninety Nine Restaurants rose 1.3% from the year-ago quarter, while same-store sales at Stoney River Legendary Steaks increased by 3.7%. Meanwhile, the company offers the best price to free cash flow ratio of 3.9 times and a free cash flow per share of $1.62, which is the highest in the restaurant industry.

Heading into the first quarter of 2011, the company estimates total revenue between $260 and $266 million, income from operations in the range of $3-$6 million and adjusted earnings before interest, taxes, depreciation, and amortization to range between $16 and $19 million. Based on seasonality patterns, average weekly sales per restaurant and restaurant level margins are higher in the first quarter than in the following three quarters.

>>To see these stocks in action, visit the 5 Restaurant Stocks With Upside portfolio on Stockpickr.