3 Restaurant Stocks to Watch in the Holiday Season

Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) and other restaurant companies should see a boost in revenue during the holiday season.

| More on:

Shoppers tend to kick their consumption into overdrive in the holiday season, but this is not just the case in retail. Restaurants also see heightened activity during the holidays before a drop-off in the colder months of January and February, when consumers are also looking to save.

In a previous article, I’d discussed whether or not restaurant stocks were a risky bet, as the economy looked to be slowing in August. Let’s take a look at three stocks to keep an eye on as we head into December.

Restaurant Brands

Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) stock has increased 31.4% in 2017 as of close on November 20 and 34% year over year. The Ontario-based multinational has performed extremely well in spite of its ongoing internal conflict with Tim Hortons franchisees. The Great White North Franchisee Association (GWNFA) has now added more than half of all Canadian Tim Hortons franchisees to its ranks.

RBI released its third-quarter results on October 26. Net income attributable to shareholders was $91.4 million compared to $86.3 million in Q3 2016. The Burger King subsidiary was once again the most successful of its three main brands. Tim Hortons experienced system-wide sales growth of 3% and comparable sales growth of 0.3%. Leadership continues to express confidence that efforts to improve efficiency at Tim Hortons franchises are producing positive results.

The stock offers a dividend of $0.27 per share with a 1.2% dividend yield. Fast-food franchises typically experience a holiday rush, so RBI could see its three brands get a boost into the new year.

Cara Operations

Shares of Cara Operations Ltd. (TSX:CARA) have decreased 0.32% in 2017 as of close on November 20. The company operates a number of casual dining chains, including Kelsey’s, Montana’s, Milestones, and others. Cara Operations released its third-quarter results on November 3.

The company posted system-wide sales growth of 36.9% to $684.7 million. System sales have jumped 43.1% year to date. Cara leadership has committed to major renovations in over 45 of its corporate and franchised restaurants in an attempt to rejuvenate a number of its brands. For example Kelsey’s, a 30-year-old casual dining chain, opted for a re-brand several years ago to appeal to the millennial generation. In a September article, I’d discussed why millennial consumer trends were bad news for casual dining chains.

Cara Operations stock also offers a dividend of $0.10 per share with a 1.6% dividend yield. Though the company will likely see a bump this holiday season, I do not like the stock going forward.

Keg Royalties

Keg Royalties Income Fund (TSX:KEG.UN) is an open-ended trust that owns the trademarks for the Keg Steakhouse + Bar restaurant chain. The stock has fallen 5.2% in 2017 as of close on November 20. The Keg is a popular spot during the holiday season, as its brand is geared towards attracting patrons who are attending celebrations.

The company released its third-quarter results on November 2. Gross sales jumped 1.6% to $147.7 million and year-to-date gross sales increased 4.2% to $18.2 million.

The stock is an attractive income play for its dividend of $0.09 per share, representing a 5.7% dividend yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned. The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC.

More on Investing

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

Hourglass and stock price chart
Stock Market

It’s Not Too Late: Invest in These TSX Growth Stocks Now

Solid fundamentals of these top TSX growth stocks could help them maintain strong upward momentum in the years to come.

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

chart reflected in eyeglass lenses
Investing

How Should a Beginner Invest in Stocks? Start With This Index Fund

This Vanguard index fund is the perfect way to start a Canadian investment portfolio.

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »