The closing of non-essential businesses and companies all over the USA was an unexpected and sudden shock to the entire economy. Of course, all of us are aware of the severity of the COVID-19 pandemic and the whole world is struggling to follow all possible measures to prevent its spread. But whereby the service sector was decimated including the hospitality and tourism industries, the re-opening of businesses from coast to coast resulted in a steady rebound in the stocks of restaurants.
In these stocks, the steep discounts narrowed before the re-opening. Organizations are still giving support to teleworking as they remain running. But sectors where face-to-face dealing is necessary, particularly in the restaurant industry, are experiencing slow recovery. Recently, a monstrously big stimulus package has been approved by the USA government as a part of its efforts to assist customers in purchasing necessities and paying rent. The spendings are maximized by the government as rates are eased by the Federal Reserve for increasing liquidity.
As the delivery of food continues to replace in-house dining moving forward, this would be an opportunity for restaurants to reorganize their activities and increase profit margins with the help of highly aggressive product pricing, smaller dining areas, and efficient kitchen setups. This will help restaurants in increasing the value of their stocks. Now let’s move to the list of best restaurant stocks to buy as shared by Insider Monkey.
On 5th position of the list by Insider Monkey, Darden Restaurants, Inc. is placed. 41 hedge funds have ownership of stocks of DRI. The biggest hedge fund shareholders of DRI include George Soros’ Soros and Andreas Halvorsen’s Viking Global. Different casual dining brands are operated by Darden including Bahama Breeze, The Capital Grille, LongHorn Steakhouse, and Olive Garden. The company did its best to earn profit margins in this crisis situation with $0.72 as diluted EPS during Q2 of 2020.
At 4th place is Yum Brands, Inc. After a huge exodus from the stock from the year 205 to 2017 which was because of the split from its operations in China, there has been a slow trickling back of hedge funds into YUM since the year 2018. Similar to other restaurants, the focus of YUM is on improving its digital presence in 2020 which led to increasing its digital sales by 30%. Every year, digital sales of YUM grew by around 25%. The strongest performing brand of YUM was Taco Bell during the 3rd quarter of 2020. You can jump directly to 10 Best Restaurant Stocks To Buy for more details.