In light of strong private company job growth in the leisure and hospitality sectors during September, five restaurant and leisure stocks with high guru ownership that are trading at fair GuruFocus Values are Dine Brands Global Inc. (DIN, Financial), Restaurant Brands International Inc. (QSR, Financial), The Wendy’s Co. (WEN, Financial), Hasbro Inc. (HAS, Financial) and Cracker Barrel Old Country Store Inc. (CBRL, Financial), according to the All-in-One Screener, a Premium feature of GuruFocus.
Private company job growth exceeds expectations, led by leisure and hospitality
On Wednesday, payroll processing company Automatic Data Processing Inc. (ADP, Financial) said that private company jobs increased by 568,000 in September, topping the Dow Jones estimate of 425,000 jobs added and the August growth of 340,000 jobs. ADP Chief Economist Nela Richardson said that the labor market recovery is “making progress” despite still being down from the growth level of 748,000 during the second quarter. Leisure and hospitality led job creation with 226,000 hires.
US markets rebound from intraday low as debt-ceiling progress outweighs rise in interest rates
The Dow Jones Industrial Average closed at 34,417.98, up 103.31 points from Tuesday’s close of 34,314.67 despite sinking to an intraday low of 33,854.69.
Stocks declined in early market trading as the strong jobs report increased long-term Treasury rates. Despite this, markets surged above the flatline as the Senate Minority Leader said in a tweet that Republicans will "allow" Democrats to “pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.”
As such, investors may find opportunities in restaurant and leisure stocks broadly owned by gurus that are trading below their GF Value Lines. GuruFocus’ research suggests that stocks broadly held by gurus have good potential. The Most Broadly Held model portfolio has returned 20.47% year to date, outperforming the S&P 500’s return of 15.7% in the same period.
Dine Brands Global
Nine gurus own shares of Dine Brands Global (DIN, Financial) with a combined weight of 78.97% as of the most recent quarter. Michael Dell (Trades, Portfolio)’s MSD Capital leads the group, giving the stock a 76.99% equity portfolio weight.
The Glendale, California-based company owns and franchises more than 3,000 restaurants under the Applebee’s and IHOP brands.
GuruFocus ranks the company’s profitability 7 out of 10 on several positive investing signs, which include profit margins and returns outperforming more than 83% of global competitors despite declining over the past five years.
Other gurus with holdings in Dine Brands include Ken Fisher (Trades, Portfolio)’s Fisher Investments, Robert Olstein (Trades, Portfolio)’s Olstein Capital Management and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.
Shares of Dine Brands traded around $85.28, showing that the stock is fairly valued based on Wednesday’s price-to-GF-Value ratio of 1.01.
Restaurant Brands International
Eight gurus own shares of Restaurant Brands International (QSR, Financial) with a combined weight of 15.31%. Bill Ackman (Trades, Portfolio)’s Pershing Square leads the group, giving the stock a 14.26% equity portfolio weight.
The Toronto-based company operates more than 27,000 quick-service restaurants under brands like Burger King, Tim Horton’s and Popeyes.
GuruFocus ranks the company’s profitability 7 out of 10 on the back of profit margins outperforming more than 91% of global competitors despite three-year earnings growth rates lagging more than 55% of global restaurant companies.
Other gurus with holdings in Restaurant Brands International include David Herro (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).
Shares of Restaurant Brands International traded around $60.27, showing that the stock is modestly undervalued based on Wednesday’s price-to-GF-Value ratio of 0.79.
Wendy’s
Eight gurus own shares of Wendy’s (WEN, Financial) with a combined weight of 8.23%. Nelson Peltz (Trades, Portfolio)’s Trian Fund Management leads the group with a 7.29% equity portfolio weight.
GuruFocus ranks the Dublin, Ohio-based quick-service restaurant company’s profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and profit margins and three-year revenue growth rates outperforming more than 93% of global competitors.
Shares of Wendy’s traded around $22.11, showing that the stock is modestly undervalued based on Wednesday’s price-to-GF-Value ratio of 0.90.
Hasbro
Eight gurus own shares of Hasbro (HAS, Financial) with a combined weight of 1.96%. Shares traded around $87.54, showing that the stock is modestly undervalued based on Wednesday’s price-to-GF-Value ratio of 0.81.
GuruFocus ranks the Pawtucket, Rhode Island-based leisure company’s profitability 7 out of 10 on the back of profit margins outperforming more than 77% of global competitors despite three-year earnings growth rates underperforming more than 42% of global leisure companies.
Cracker Barrel
Eight gurus own shares of Cracker Barrel (CBRL, Financial) with a combined weight of 1.16%. Shares traded around $143.58, showing that the stock is fairly valued based on Wednesday’s price-to-GF-Value ratio of 0.95.
GuruFocus ranks the Lebanon, Tennessee-based restaurant company’s profitability 6 out of 10 on the back of profit margins and three-year revenue and earnings growth rates outperforming more than 65% of global competitors.
