Buffalo Wild Wings (BWLD) just reported a great quarter. EPS of 31 cents on same store sales of 8.3%. The stock is surging and trading higher than the level at which I sold the first half of my position after the company last reported.
The restaurants are back. Yum Brands (YUM) is too cheap to ignore here. I added some to my personal account today on top of my already full sized position for client accounts that I accumulated last week at lower prices.
McDonald’s (MCD) my favorite name in the sector had a big move today as well. It recouped its losses after selling off after the company reported stellar earnings last week.
YUM and MCD both got kicked in the crotch because of higher commodity costs. However, I firmly believe that that food commodity inflation is already in the numbers and we can see relief once we annualize some of those numbers as we enter next year. I expect the MCD board will raise its dividend next month.
YUM and MCD are both growing like wild rice over in China. I have kept out of this sector for a while but the time is right to allocate more assets to restaurants as investments. Stay away from the fixer-uppers like Starbucks (SBUX) and Denny’s (DENN) except for quick trades. Note that DENN also reported earnings after hours and is getting a bid on raised guidance despite missing estimates by a penny. DENN has way too much debt for my appetite.
At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares of BWLD, MCD, YUM --- although positions can change at any time.
Posted By Scott Rothbort at July 29, 2008