NEW YORK (TheStreet) -- Lower gas prices will spice up sales this summer at Brinker International's (EAT) Chili's restaurant chain, says Gary Bradshaw, portfolio manager for the Hodges Small Cap Fund.
"With energy prices down -- and we think they will stay lower for longer -- the consumer has more money in his pocket, and he is going to go out to eat at a lot of these restaurants," Bradshaw said. He added that Brinker's stock is relatively inexpensive, trading at about 15 the earnings estimate for 2016. Shares of Brinker, which sports a dividend yield of 2%, are down 5% for the year to date.
Cracker Barrel (CBRL) is another restaurant chain that will see a sales boost due to the drop in gas prices in Bradshaw's opinion. Shares of the company, which has over 630 stores along the interstate highway, are flat so far in 2015 after rising over 30% in 2014.
"Their last quarter was fabulous with 7% same-store sales growth. We think that continues," says Bradshaw. "We think their earnings will grow 16% to 17% and that 3% dividend yield makes it attractive as well."
Bradshaw is also positive on Pilgrim's Pride (PPC) despite the company's stock falling over 6% in the past week due to worries about bird flu hitting the nation's poultry producers.
"It's unfortunate about what's happening with bird flu in this country, but Pilgrim's Pride grows broiler chickens and that part of the market has not been affected as much by the contagion which has ravaged egg-laying chicken and turkey farms," says Bradshaw.
The drop in Pilgrim's stock has made it "dirt cheap" in Bradshaw's view at less than 8 times the company's trailing 12 month earnings. And the fall in soy and corn prices also makes the company's feed costs lower which will help it expand its margins.
Finally, Bradshaw is a fan of Casey's General Stores (CASY), a Midwest convenience store operator which as seen its stock rise over 25% in the past year.
"Casey's has a lot going for it in addition to the fact that they are selling more food due to lower gas prices," says Bradshaw. "They own all the real estate under their 1850 stores and we expect them to open another 100 stores each year."