Restaurant stocks soared higher earlier this year as the vaccinations and falling coronavirus case counts increased optimism that the economy would be able to fully recover.
However, over the past couple of months, this sector has underperformed as it became clear that the pandemic wasn't going to have such a neat and tidy ending. Yet, this may be the time to buy the dip as case counts are starting to decline, setting us up for a nice year-end rally.
Ruth’s Hospitality Group (RUTH), Texas Roadhouse (TXRH), and Bloomin’ Brands (BLMN) are three steakhouse stocks worthy of your investing dollars. These stocks are well-positioned to absorb higher costs and pass them on to customers.
RUTH
RUTH is the country’s top fine-dining steakhouse. Search Google for “Ruth’s near me” and you will likely find at least one of these fine dining locations within a reasonable distance from your home or workplace. More than 150 Ruth’s Chris Steak House restaurants are open in the United States.
RUTH has a beta of 2.41, partially because of the tumultuous year for restaurant stocks that was 2020. The stock is currently trading at $20.42. RUTH's 52-week low is $9.95. The stock has a 52-week high of $28.73. RUTH has a forward P/E ratio of 18.02, a respectable figure, especially when juxtaposed with the market's seemingly countless overvalued stocks.
RUTH qualifies as a Buy as it has a B POWR Rating. RUTH has B grades in the Quality, Value, Growth, and Sentiment components of the POWR Ratings. Investors can learn more about RUTH's Momentum and Stability component grades by clicking here.
Out of the 44 stocks in the Restaurants space, RUTH is ranked third overall. You can find out more about the stocks in this segment by clicking here.
The top analysts are pounding the table in favor of RUTH. If these analysts' predictions come true, RUTH will reach its average target price of $25.90. Such a spike equates to a 29.44% increase in value.
TXRH
TXRH has nearly 600 Texas Roadhouse and Bubba’s restaurants spaced out across the United States and nine other countries. TXRH has successfully pivoted to a business model that includes online ordering, to-go orders, and delivery. Exactly 17% of TXRH's second-quarter earnings were attributable to to-go sales.
TXRH has a B POWR Rating grade, meaning it is a Buy. The stock has B grades in the Quality, Value, and Growth components. Click here to learn more about TXRH's performance in the rest of the POWR Rating components such as Momentum, Stability, and Sentiment.
Out of the 44 Restaurant stocks, TXRH is ranked 24th. Investors can find out more about the Restaurant segment by clicking here.
If the analysts are correct, TXRH is headed higher. The average analyst price target for the stock is $106.29, meaning it has more than 17% upside potential. The average price target for TXRH has increased by $53.17 in the prior 15 months.
TXRH's low beta of 1.09 should pique your interest. However, the stock's forward P/E ratio of 24.54 is a bit high for its industry.
BLMN
BLMN’s casual dining restaurants consist of Outback Steakhouse, Fleming’s Prime Steakhouse, Bonefish Grill, Carrabba’s Italian Grill, and more. Based in Tampa, Florida, BLMN owns and franchises locations throughout the United States.
The professionals who assess stocks for a living are quite bullish on BLMN, establishing an average target price of $34.79. An increase to this level equates to a 41.25% jump.
BLMN has a comparably high beta of 2.17 yet its low forward P/E ratio of 8.94 will certainly attract investors.
BLMN has a B POWR Rating grade. The stock has A grades in the Value and Growth components of the POWR Ratings. BLMN also shines bright in the Quality component with a B grade. Investors are encouraged to learn more about BLMN's POWR Rating components by clicking here.
BLMN ranks in the top 10 of its Restaurants category, slotting in at 44th overall. You can find out more about the stocks in this space by clicking here.
BLMN shares were trading at $24.99 per share on Friday morning, down $0.37 (-1.46%). Year-to-date, BLMN has gained 28.68%, versus a 19.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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