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The selloff in restaurant stocks kickstarted by tepid Q3 reports from Chipotle and McDonald's...

The selloff in restaurant stocks kickstarted by tepid Q3 reports from Chipotle and McDonald's has analyst banter focusing in on which names investors should jump on with the sector getting battered. Brian Sozzi sees Dominos Pizza (DPZ -2.8%) as sitting in oversold terrioty , while Morningstar thinks Burger King (BKW -4.7%) and Wendy's (WEN -2.7%) could ride improved menus to surprising results.
Comments (4)
  • StLoMoDan
    , contributor
    Comments (65) | Send Message
     
    I have been holding WEN at a loss for several years now. Do you think it would make sense to cost average down at this point?
    19 Oct 2012, 08:13 PM Reply Like
  • Raykroc
    , contributor
    Comments (5) | Send Message
     
    Doubt it. Mcd s will attack with more value driving down profit for whole industry fast food
    21 Oct 2012, 08:29 PM Reply Like
  • Raykroc
    , contributor
    Comments (5) | Send Message
     
    Also commodity costs increasing next 12-18 months....
    21 Oct 2012, 08:30 PM Reply Like
  • interzone826
    , contributor
    Comments (184) | Send Message
     
    Raykroc is correct in his two points, but on the other hand, WEN is at a 10-year low and is partially through a revamp. Plus, aren't most of Wendy's outlets in the Americas, meaning they are less exposed to the Eurozone issues that McDonald's is? If Wendy's retooling and brand repositioning works, then it has nowhere to go but up. But I could see it dropping a little more in the short term. The key is whether the changes Wendy's is making to it's look and menu will be so far reaching that it shows up on the radar of those who eat at Chipotle or the Cantina Bell menu at Taco Bell. Even if it doesn't appeal to that crowd, it wouldn't take much to woo customers from McDonald's, taste-wise. Wendy's already serves better tasting food.

     

    As for cost averaging down, the only real question is what made you buy it at the higher price? If you still feel good about the reasons that prompted that sale, then yes, buy more now. If your faith in the company's management has lessened, then don't.

     

    About cost averaging, here's an interesting angle:
    http://seekingalpha.co...

     

    I agree with this in general, but then, I'm partial to contrarian views. I've just begun looking at Wendy's, personally, but I like it because I think the market is about to contract for a while, and possibly the global economy, too, and I think things like WEN or SBUX will continue to do well because what they sell is relatively cheap. People can, however, put off purchasing a new iPhone . . .
    22 Oct 2012, 12:22 AM Reply Like
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