4 stocks to buy as restaurant sales increase in May

The restaurant industry seems to finally be getting back on its feet as the economy reopens and more and more people come out without hesitation to dine out. In addition, people are prepared to spend more, thanks to the new round of fiscal stimulus which gives them more purchasing power.

Although retail sales fell in May, sales in bars and restaurants jumped, also indicating that people are spending more on services than on goods. In addition, hiring has also increased in restaurants and bars. The rebound comes after nearly a year of scant activity in restaurants and bars due to the pandemic, which has kept people indoors for months.

Restaurant sales jump in May

The Commerce Department said on June 15 that restaurant and bar sales rose 1.8% in May on a month-over-month basis. Total bar and restaurant receipts were $ 67.3 billion. Year over year, sales jumped 70.6%. The gap is huge because restaurants ended up with almost no customers last year around this time, when the pandemic had just hit and everything had to be closed.

In addition, people did not have enough money to shell out in restaurants as millions of people lost their jobs during this time. That said, restaurant sales have increased over the past three months, indicating that the industry is on track for a rebound.

The jump in restaurant sales comes despite a drop in overall retail sales. The Commerce Department also said people recently spent more on services than on goods.

The restaurant industry on the verge of growth

Until a few months ago, people feared leaving their homes for fear of contracting coronavirus. However, cases have declined over the past three months as more people get vaccinated.

This not only instilled more confidence in them, but also allowed the government to relax restrictions. In addition, President Joe Biden’s new round of $ 1.9 trillion coronavirus relief stimulus checks has given people more purchasing power.

According to a Restaurant Business Online article, citing a report by the National Restaurant Association, American restaurants are on track for a steady recovery after falling 19.2% in 2020, which was also the toughest year. for industry.

In addition, with the continued economic reopening, the restaurant industry is once again in the midst of a wave of hiring. In April, the leisure and hotel industry hired 331,000 people, according to the Ministry of Labor. This is an indication that people have started to frequent restaurants again and that in the coming days, business will explode as more and more people get vaccinated.

Our choices

So this is an opportune time to invest in these restaurant stocks. Each of the stocks carries a Zacks Rank # 1 (strong buy). You can see the full list of today’s Zacks # 1 Rank stocks here.

Bloomin Brands, Inc. BLMN is a casual catering company with a portfolio of differentiated catering concepts. It has five concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s.

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 87.7% in the past 60 days.

Dine Brands Global, Inc. DIN is a full service catering company. It operates and franchises restaurants under the Applebee’s Neighborhood Grill & Bar and IHOP brands.

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 40% in the past 60 days.

Ruths Hospitality Group, Inc. RUTH is the largest fine grill company in the United States, measured by the total number of company-owned and franchise-owned restaurants, with more than 150 Ruth’s Chris Steak House restaurants around the world.

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 77.6% in the past 60 days.

Texas Roadhouse, Inc. TXRH is a casual, full-service restaurant chain, offering an assortment of seasoned and aged steaks hand-cut daily on site and cooked to order on open gas grills.

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 35.3% in the past 60 days.

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