The restaurant industry is gaining traction with rising foot traffic and improving delivery chains, and the National Restaurant Association recently reported a positive outlook for the industry. Therefore, we think restaurant stocks Ruth's Hospitality (NASDAQ:RUTH) and The ONE Group (STKS), which possess solid financial profiles, could be good bets now. Moreover, Piper Sandler analyst Nicole Miller Regan has upgraded these stocks to Overweight from Neutral. Read on.Over the past year, the restaurant industry has faced several operational challenges to which, in response, it focused on strengthening its delivery services to stay afloat amid pandemic-led restrictions. However, with the fast-paced vaccination rollout and the subsequent easing of the social distancing mandates, restaurants have since the beginning of this year been witnessing rising foot traffic.
As per a recent report by the National Restaurant Association, food and beverage sales in the restaurant and foodservice industry are projected to total $789 billion in 2021, up 19.7% from 2020.
Given the industry’s solid growth prospects, we think fundamentally sound stocks in this space Ruth's Hospitality Group, Inc. (RUTH) and The ONE Group Hospitality, Inc. (NASDAQ:STKS) could be solid bets now. Piper Sandler analyst Nicole Miller Regan has upgraded RUTH to Overweight from Neutral with a $28 price target. Regan noted that the company has "balanced consumer positioning across social, local business and special occasions." Also, Regan upgraded STKS to Overweight from Neutral with a $17 price target. The analyst sees the company’s potential for multiple expansion and believes it can leverage accelerated global development opportunities.