While restaurant stocks have shown signs of weakness, the fundamentals are more stable than the media or markets would have investors believe, says Credit Suisse Analyst Keith Siegner. He points to potential growth stories, despite the volatility in the U.S. consumer outlook.
“We believe investors should be focusing on large consumer multinationals with strong brands, high returns and free cash flows, international growth opportunities and the wherewithal to invest in comps in the U.S.,” said Siegner, adding that having the size and scale to pursue market share is imperative in the current economic environment.
Yum! Brands (YUM) and Starbucks (SBUX) are among Siegner’s favorite names — Yum! for its long-term growth potential and ability to tap into China’s emerging consumer class, and Starbucks for its investment in comps and international margin improvements.
Siegner places emphasis on international growth stories, seen in companies like McDonald’s (MCD) and Yum!.
“For Yum!, the YRI business, getting to be potentially a $1.25 billion business by 2015 from under $500 million now, is a huge opportunity,” Siegner said. “McDonald’s is very clearly targeting [Burger King (BKC)] as a share donor in Germany, Burger King’s largest European market.”
Western Digital Corp (NASDAQ:WDC) Has Runway with Growth of Hyper-Scale Data Centers
April 07, 2017
Scale of Portfolio is an Advantage in BDC Industry
November 30, 2011
U.S. Airways Group (LCC)’s Merger with American Leads to Increased Pricing Power and Economies of Scale
March 18, 2013
Solazyme Inc (SZYM) to Scale Up Two Plants in 2014
March 05, 2014
NXP Semiconductors NV (NXPI) Gaining Scale Through Acquisition
May 28, 2015
