Restaurant Stocks Buck the Headwinds

Contrary to conventional wisdom, the Restaurant Industry group has been one of the top performing categories both YTD and over the past 52 weeks.

Intrepid souls who bought near this year's lows have made great gains by committing to good companies when the macro-environment seemed to be firmly negative for the group.

Here are three examples of exactly that: Darden (DRI), CBRL Group (CBRL), and Brinker (EAT). (Click chart to enlarge.)

All three were at huge discounts to their typical P/Es at their lows and are still trading somewhat cheap compared to their normalized valuations.

If you wait for the macro-enviroment to look good, you will almost always have missed the best buying opportunities. In a supply and demand market you must force yourself to purchase good companies when the crowd sees no near-term catalysts for them.

That's when they'll be willing to sell them at rock-bottom prices.

Disclosure: Author owns shares in all three stocks mentioned.

Comments

[borisb:]

restaurant stocks are not bucking $140 oil ,
are you on drugs?

2008 Jun 13 07:51 PM