I’ll admit, I love a good burger. Growing up there were the usual fast food places to get a burger. But now, you have lots of options when it comes to burgers. There is something there for every taste and every budget. Because of my love for fast food, it’s only natural that I write a post highlighting fast food stocks.
Today you will learn about 4 fast food stocks. Not all are great investments at the moment, but this doesn’t mean in the future they won’t be in a few years. Let’s take a look at 4 popular fast food stocks and see what they have cooking.
4 Fast Food Stocks For Investors to Chew On
#1. McDonalds (NYSE: MCD)
The longtime burger chain sees its earnings ebb and flow. It will be a solid performer for a few years and then hit a rough patch. Recently, McDonald’s has been coming out of a rough patch. They turned their breakfast menu into an all-day option as a trial and saw sales turnaround immediately.
Now they are using that momentum to grow even more. Yesterday the fast food chain reported earnings and blew estimates away. Earnings per share came in at $1.47 which was $0.14 higher than estimated. They even saw revenues come in at $5.6 billion.
And looking forward, there is no slowing down. McDonald’s is pushing ahead with its modernization plans. This includes using fresh beef, self-serve kiosks and expanding their all-day breakfast menu to more stores. They also plan in increasing prices by 2% in 2017 as well.
But the biggest news is with UberEats. Never heard of this before? You’re not alone. I was clueless as well. It turns out McDonald’s is going to start offering home delivery of its food and it will be delivered by Uber drivers.
Investors are excited for the future for McDonald’s. The only issue is the stock price. It has had a nice run and may be at the top of some investor’s price point. The question is, do you get in now and expect the stock to continue to deliver, or wait for a pull back?
I would get in now, as I see nothing that will be slowing this stock down in the short term.
#2. Shake Shack (NYSE: SHAK)
Shake Shack is a newcomer to the burger world. They do things differently by going organic and introducing new burgers and sandwiches inspired by chefs.
If you look at the stock, you might run for the hills. The stock is down close to 60% from its high. But don’t let that fool you. What happened is investor’s got irrational about the stock and bid up the price. While it still looks a little pricey from a price to earnings view, it’s not. And I would argue it’s not getting any cheaper either.
As of this writing Shake Shack has just $2 million in debt on the books. They have 114 units in 16 states and are slowly adding new units each year. They recently raised their guidance for 2017 as well.
So not only will they have added revenue from new stores, but Shake Shack has been a star at growing its customer base at existing units. Add this together and you will see some impressive numbers when the company reports earnings. Of all the fast food stocks listed here, this is the one to buy now.
#3. Wendy’s (NYSE: WEN)
Wendy’s was an innovator when they went to using fresh, never frozen patties for their burgers. Then they turned heads again when they started to offer healthier options to their menu. But the company hit a rough patch recently and has been working hard to turn things around. Their 4 items for $4 promotion helped to kick this process into high gear.
When they recently reported earnings, many saw revenues had declined and became worried. But a closer look at the numbers show something positive happening at Wendy’s. Even though revenue was down, gross profit was up. This means the company is able to squeeze more income out of every dollar they make.
And then there is Wendy’s on social media. If you want to have some fun, be sure to follow this company. They consistently call out other fast food companies and have fun with customers as well. Just look at their Twitter challenge for free nuggets for a year that is going on as proof.
Currently, the company has an aggressive growth plan it hopes to accomplish by 2020. If successful, this stock will pop. But for now, you have time before jumping into this one.
#4. Sonic (NASDAQ: SONC)
I love the Sonic commercials. But as much as I laugh at them, they aren’t a reason to invest in the stock. The company stock has been a solid performer the past 2 years, but has recently hit some tough times.
Same store sales fell by over 7% while analysts estimated they would fall just 4%. On the plus side, net income did increase by 14%.
Still the outlook for 2017 isn’t great. The company expects same store sales to fall 2% for the year.
As the company tries to get back on track, your investment dollars are better served in McDonald’s or Shake Shack. In time Sonic will be a stock to invest in, but for the time being, they just don’t have their act together enough to warrant a position.
Fast food stocks experience ebbs and flows all of the time. The key is to get in when they start turning the corner and riding them for as long as you can and as long as they fit with your asset allocation.
The 4 stocks listed here are all in different places. Some you should invest in now, while others have time to cook a little more before you should invest. The important thing is to keep them on your radar so you can jump in when they do start to turn the corner.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.