2 mouthwatering taco stocks to buy, 2 to sell

Tacos are often considered a staple food for any occasion that can be enjoyed anywhere, as they are easy to carry, easy to eat, and quite suitable for restaurant meals. Fast food operators and restaurants offer a wide range of personalized tacos that are acceptable even to picky eaters. Plus, their healthier, less expensive characteristics have made tacos become the dominant appetizer everywhere.

Online and physical food operators are experiencing strong pent-up demand for tacos. As such, quality stocks in this Yum space! Trademarks, Inc. (YUM) and El Pollo Loco Holdings, Inc. (LOCOMOTIVE) are well positioned to take advantage of the trend.

However, with consumer preference for healthier, homemade food, we think the fundamentally weak companies in this space — Chipotle Mexican Grill, Inc. (GCM) and Fiesta Restaurant Group, Inc. (FRGI) – might struggle to stay afloat.

Shares to buy:

Yum! Trademarks, Inc. (YUM)

YUM operates and franchises more than 50,000 restaurants in multiple countries under the KFC, Pizza Hut, Taco Bell and The Habit Burger Grill brands. YUM operates approximately 25,000 KFC units, 17,639 Pizza Hut units, 7,427 Taco Bell units and 287 The Habit Burger Grill units in more than 150 countries and territories. The company is headquartered in Louisville, Ky.

In September, YUM acquired Dragontail Systems Limited, a provider of technology solutions for the food industry. With this acquisition, YUM intends to deploy Dragontail kitchen order management, delivery and other technologies globally for its brands and franchises.

YUM’s total revenue for the third quarter, ended September 30, 2021, increased 10.9% year-over-year to $ 1.61 billion. Of the society Operating profit was up 11.9% from its value a year ago to $ 527 million. Its net income increased 86.6% from the prior year quarter to $ 528 million. In addition, the company’s EPS increased 90.2% year-on-year to $ 1.75.

Analysts expect YUM’s revenue for its 2021 fiscal year to be $ 6.57 billion, up 16.2% year-over-year. The company has an impressive history of profit surprises; it has beaten consensus EPS estimates in each of the past four quarters. YUM’s EPS is expected to grow 25.1% in the current year and 9.7% next year. And the stock has gained 23.3% in progress in the past nine months and 28.4% in the past year.

YUM’s strong fundamentals are reflected in its POWR odds. The stock has an overall B rating, which is equivalent to a purchase in our proprietary rating system. POWR ratings assess stocks based on 118 distinct factors, each with its own weight.

Additionally, the stock has an A rating for quality and a B rating for momentum. We also rated YUM for Growth, Value, Stability, and Sentiment. Click here to access all of YUM’s notes. YUM is ranked n ° 17 out of 44 stocks in the A ranking Restaurants industry.

El Pollo Loco Holdings, Inc. (LOCOMOTIVE)

LOCO, in Mesa, california, develops, franchises, licenses and operates quick service restaurants under the El Pollo Loco brand. The company operated approximately 475 company-owned and franchised restaurants in Arizona, California, Nevada, Texas, Utah and Louisiana as of March 11, 2021.

For the second quarter, ended June 30, 2021, LOCO’s total revenue increased 22.5% year-over-year to $ 121.99 million. The company’s operating profit increased 70.1% from its value a year ago to $ 12.67 million. Its net profit increased 60.4% from the previous year quarter to $ 8.82 million. Additionally, the company’s EPS increased 50% year-on-year to $ 0.24.

LOCO’s revenue is expected to grow 9.3% year-on-year to $ 465.84 million in its 2021 fiscal year. The Company has an impressive history of profit surprises; it has beaten consensus EPS estimates in each of the past four quarters. LOCO’s EPS is expected to increase 25% in the next quarter and 9% in the current year.

LOCO’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which is equivalent to a purchase in our proprietary rating system. Additionally, the stock has a B rating for value, momentum, and stability.

In addition to the POWR ratings that I just highlighted, we can see LOCO’s ratings for growth, quality and feeling. here. LOCO is ranked # 15 in the Restaurants industry.

Actions to avoid:

Chipotle Mexican Grill, Inc. (GCM)

CMG, along with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Denver, Colorado based concern operates Chipotle restaurants across the United States, international Chipotle restaurants and non-Chipotle restaurants, and only serves meats at its Chipotle restaurants. The company owned and operated approximately 2,900 restaurants in the United States, Canada, United Kingdom, France and Germany as of October 21, 2021.

Last month, National Law Firm Morris Kandinov started investigating CMG regarding corporate governance failures, possible breaches of fiduciary duties and other violations of law, including securities claims on behalf of shareholders relating to recent transactions and events in the company. This turn of events could negatively impact CMG’s price performance in the near term.

CMG’s total revenue increased 21.9% year-on-year to $ 1.95 billion for the third quarter, ended September 30, 2021. However, the company’s total operating expenses increased 14.6% from its value a year ago to $ 1.71 billion. In addition, its other operating costs increased 9.8% from a year ago to $ 294.65 million.

CMG’s share price has fallen 7% in the last month and 3.8% in the last three months.

CMG’s POWR ratings are consistent with this grim outlook. The stock has a C rating for sentiment and a D for growth and value.

Click here to see additional POWR ratings for CMG (momentum, stability and quality). The action is ranked # 33 in the Restaurants industry.

Fiesta Restaurant Group, Inc. (FRGI)

Founded in 2011, FRGI owns, operates and franchises fast-casual restaurants under the Pollo Tropical and Taco Cabana brands. The Addison, Texas the company’s menu includes roast pork mojo and TropiChops, balsamic tomatoes, chicken fajitas, feature-rich tacos, breakfast tacos, a dozen boxes of tacos and a wide range of Mexican inspired dishes.

During the second quarter, ended July 4, 2021, FRGI’s total revenue increased 43.7% year-on-year to $ 91.16 million. However, the company’s total operating expenses rose 24.5 percent from its value a year ago to $ 89.26 million. His net loss amounted to $ 83,000 for the period.

Analysts expect FRGI’s revenue to decline 25.3% year-on-year to $ 414.38 million in fiscal 2021. Company’s EPS is expected to decline 75% in current quarter . Its stock has fallen 24.2% in the past three months and 27.8% in the past nine months.

FRGI’s poor outlook is reflected in its POWR ratings. The stock has a D rating for growth and sentiment. Click here to access the additional notes of the FRGI (Stability, Value, Momentum and Quality). FRGI is ranked # 24 in the Restaurants industry.


CMG shares were trading at $ 1,775.42 per share on Friday morning, down $ 2.21 (-0.12%). Year-to-date, CMG has gained 28.03%, compared to a 23.63% increase in the benchmark S&P 500 over the same period.

About the Author: Priyanka Mandal

Priyanka is an avid investment analyst and financial journalist. After earning a master’s degree in economics, her interest in financial markets motivated her to embark on her career in investment research. Following…

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