In light of Krispy Kreme Inc. (DNUT, Financial) surging more than 17% on its first day of trading, five restaurant and confectioner stocks with high financial strength and profitability as of Friday are Chipotle Mexican Grill Inc. (CMG, Financial), Texas Roadhouse Inc. (TXRH, Financial), Tootsie Roll Industries Inc. (TR, Financial), Chuy’s Holdings Inc. (CHUY, Financial) and Rocky Mountain Chocolate Factory Inc. (RMCF, Financial) according to the All-in-One Screener, a Premium feature of GuruFocus.
Popular donut chain Krispy Kreme resumes public trading following five-year hiatus
The Charlotte, North Carolina-based donut chain gained more than 17% on Thursday, following the pricing of its initial public offering at $17 per share Wednesday evening. Krispy Kreme went private in 2016 following 16 years of public trading since 2000.
Over its 83-year history, Krispy Kreme has developed a broad customer base: The donut chain sold 1.3 billion donuts across 30 countries during fiscal 2020. Krispy Kreme’s original glazed donut can be served hot; further, the company’s donut shops have an iconic “Hot Now” light to warn customers that the donuts are hot and ready.
Krispy Kreme also said that indulgence foods like donuts, sweets and other fast-casual foods have performed well during economic downturns, including 4% growth during the 2008 financial crisis and 4.3% growth during the coronavirus pandemic. The company believes that consumers may occasionally want an indulgence regardless of the environment.
As such, investors may find opportunities in restaurant and confectioner stocks with high financial strength and profitability. GuruFocus’ All-in-One Screener listed five companies with financial strength rank and profitability rank of at least 6.
Chipotle Mexican Grill
Chipotle Mexican Grill (CMG, Financial) operates a network of fast-casual restaurants, each offering items like burritos, quesadillas and taco bowls. GuruFocus ranks the Newport Beach, California-based company’s profitability 8 out of 10 on several positive investing signs, which include profit margins and returns outperforming more than 80% of global competitors.
Texas Roadhouse (TXRH, Financial) operates casual-dining restaurants that serve food items like steaks and pork ribs. GuruFocus ranks the Louisville, Kentucky-based company’s profitability 7 out of 10 on the back of profit margins and returns outperforming more than 70% of global competitors.
Tootsie Roll Industries
Tootsie Roll Industries (TR, Financial) manufactures and sells a wide range of candy products, including Tootsie Rolls, Dots and Blow Pops. GuruFocus ranks the company’s profitability 6 out of 10 on the back of profit margins outperforming more than 70% of global competitors despite three-year revenue and earnings growth rates underperforming more than 60% of global confectioner companies.
Chuy’s (CHUY, Financial) operates a network of restaurants that serve Mexican food items like enchiladas, fajitas, tacos and burritos. GuruFocus ranks the company’s profitability 6 out of 10: Even though three-year ' rel='nofollow' target='_blank'>revenue and ' rel='nofollow' target='_blank'>earnings growth rates underperform more than 55% of global competitors, Chuy’s has a high ' rel='nofollow' target='_blank'>Piotroski F-score of 7 and an operating margin that outperforms over 80% of global restaurant companies.
Rocky Mountain Chocolate Factory
Rocky Mountain Chocolate Factory (RMCF, Financial) manufactures a wide range of chocolate and caramel products. GuruFocus ranks the Durango, Colorado-based company’s financial strength 6 out of 10 on the back of cash-to-debt and debt-to-equity ratios outperforming more than 66% of global competitors.
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