Going Out to Eat? You’re Not the Only One
- Posted by TheArmoTrader
- on July 6th, 2011
I was taking a look at the restaurant sector today and most charts look very bullish. In fact, a lot of stocks are hitting either new 52week highs, new multi-year highs, or new alltime highs. Despite this not-so-great economic times and higher commodity prices, looks like the restaurant sector was still able to stay strong. Last June (2010), when @ppearlman was at the LA Trader’s Expo, he had a great call. He said despite the bad times, people are still going to go out to eat. Eating is what Americans love to do. And unless we find way of making food non-essential (which I would not bet against), then there should be no reason to be bearish on restaurant stocks. And the charts prove it. Below you will see a list of restaurant stocks (not really fast food) hitting new highs. The stocks listed below are just a list of best ones. Most other restaurant stocks look strong as well.
Note: All charts are weekly charts unless specified.
1) $BWLD -Buffalo Wild Wings Inc. – This one makes the MOST sense to me. If you don’t know the history (myth?) behind chicken/buffallo wings look it up. But to sum it up, basically the wings used to be thrown away (pre-depression). But when the depression hit, people needed to find a cheap source of protein. Buffalo wings became the standard. As for the stock, it is hitting new all-time highs. It is pretty extended short term but as long as it stays above 56.50, the short term bullish thesis remains.
2) $DRI -Darden Restaurants, Inc. - The name might not be too familiar but Darden Restarunts own’s Red Lobster, Olive Garden, LongHorn Steakhouse, Capital Grille, Bahama Breeze and Seasons 52 restaurants. It is very diversified and looks like that has helped its cause as it also hit new all-time highs this week. This one recently broke out after earnings. Wait for some more consolidation before thinking long. It needs to hold 52.00.
3) $MRT -Morton’s Restaurant Group Inc. - MRT own the famous Morton’s steakhouse restaurant. Looks like the “rich mans” meat is not effecting much at all recently. The chart is not anywhere near all-time highs but a hold over 7.75 and a breakout 8.75 can see a nice run.
4) $BJRI – BJ’s Restaurants, Inc. -Daily: BJ’s owns the famous pizza restaurants (which usually comes with a Brewery or Brewhouse). This stock has been on a tear since the 2009 bottom. It has had some nice consolidations and bases here and there which makes it a very healthy uptrend stock. Hit new all-time highs today. Watch for a pullback to the 51.50 ish area for an entry if it holds.
5) $CAKE – The Cheesecake Factory Incorporated – The Majority of CAKE’s revenue comes from their famous Cheesecake Factory restaurant. If it can get over 33.50 and hold, it has a chance to make a run for the 2006 all-time highs around $39.If it pulls back, watch for the area of 28.50 for a hold (has been important inflection in the past).
6) $EAT – Brinker International Inc. – EAT owns and operates the Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) restaurant brands. It set a nice base around 23.15 this year and now is on a verge of a breakout. A hold over $26.25 can see a nice run to possibly 30. The stock is nowhere near overbought and could easily make a nice run here.
7) $RRGB – Red Robin Gourmet Burgers Inc. – RRGB owns and operates its chain of restaurants under the same name. Its main focus is on burgers. While this stock is nowhere near its all-time highs, it is still making new multi-year highs. It is putting in a bull flag on the weekly (which actually on the daily is actually a runaway island breakout). A move over 38 can see a nice breakout to possibly ~$44. A little overbought but nothing 1-2 weeks of consolidation can’t fix.
8 ) $RUTH – Ruth’s Hospitality Group Inc. - RUTH owns and operates various Steakhouses and Fish Market restaurants. A ‘cheapie’ here but the chart looks ripe for a breakout over 6.60. Its nowhere near all-time highs but is on the verge of making a big move soon to a new multi-year high. A bit overbought here so a failed breakout would not surprise me, but there is no denying the bullish ascending triangle pattern.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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