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3 Red-Hot Restaurant Stocks That Should Continue to Rally

Stock MarketsMay 11, 2021 01:30PM ET
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© Reuters. 3 Red-Hot Restaurant Stocks That Should Continue to Rally

The COVID-19 crisis has shifted the restaurant industry’s landscape. The digital platforms and curb-side delivery options adopted during the pandemic are expected to continue being one of the industry’s key strengths after the pandemic. While this transition has already bolstered the growth of established restaurant operators McDonald’s (MCD), Yum! Brands (NYSE:YUM), and Restaurant Brands International (NYSE:QSR), the increasing resumption of patrons’ physical visits to restaurants, thanks to a speedy and effective vaccination drive, we think should drive their growth further and sustain their stocks’ continued rally. Read on.It is undeniable that the COVID-19 pandemic introduced new challenges to restaurants as consumer fears and social distancing mandates brought restaurants to their knees. But the restaurant industry came back swinging, with curb-side delivery and drive-thru facilities that played a big role in saving many. In fact, as mega-restaurant chains continue to invest heavily in digital channels, they should continue generating sales growth.

Furthermore, after being confined at home for almost a year in compliance with lockdown mandates, people are expected to heartily embrace dining out again now that a mass vaccination drive is in full swing and appears to be effective. Indeed, the global market for full-service restaurants is expected to grow at a 4.7% CAGR over the next six years to hit $1.7 trillion in 2027.

The recovery from the pandemic and the expected economic growth this year have driven a rally in restaurant stocks McDonald's Corporation (NYSE:MCD), Yum! Brands, Inc. (YUM), and Restaurant Brands International Inc. (QSR). Given that these companies are supercharging their advertising and digital platforms, we believe they are uniquely positioned to soar further.

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3 Red-Hot Restaurant Stocks That Should Continue to Rally
 

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