2 Top Restaurant Stocks to Buy in February 2024

Consider Restaurant Brands International (TSX:QSR) and another terrific fast-food restaurant play to buy on weakness.

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The restaurant stocks have been less than remarkable over the past few weeks amid the tech sector’s recent run. Why settle for defensive dividend-paying plays when you can just bet on the economy’s most innovative plays?

Undoubtedly, there’s more hope that 2024 will be a good-ish year for markets and the economy. With rate cuts on the way and a consumer that’s rolling with the punches, playing a bit of defence doesn’t seem to make a whole lot of sense right now.

That said, it’s always a good idea to be prepared for a rainy day. And when the market weather takes a turn for the worst, you’ll be glad you had an umbrella to shield you from the rain.

As some of the top restaurant stocks pull back, it may make sense to pick up a few of them on the dip, even if you’re bullish on 2024. Restaurant stocks can hold their own through tough times, and the following, I believe, are poised for growth, regardless of what Mr. Market deals to investors in 2024.

Restaurant Brands International

Restaurant Brands International (TSX:QSR) can’t seem to sustain its bull run, recently dipping after flirting with new all-time highs. At just shy of $103 per share, I view QSR stock as a magnificent bargain for new investors seeking to invest through all seasons. The stock trades at 26.33 times trailing price to earnings, with a dividend yield of 2.8%. Should shares fall such that the yield surpasses 3% again, I’d be inclined to pound the table on the diversified fast-food firm.

The company is well-managed and has the ability to expand its growth horizons through expansion, store renovations, and the introduction of new menu items. Of course, there’s also tech and automation that could be a margin booster through 2030. Either way, the stock looks too cheap to ignore if you seek top-tier fast-food restaurant exposure at a fair price.

McDonald’s

The firm behind the legendary golden arches recently reported its quarterly earnings, and they were quite the stinker, causing shares of McDonald’s (NYSE:MCD) to shed more than 3%.

Undoubtedly, McDonald’s stock isn’t known to be a massive mover after an earnings result. And after recent price hikes, it appears that lower-income consumers (think those who pull in US$45,000 or less) are putting their wallets away in favour of some good, old-fashioned home cooking. With the price of a McDonald’s meal on the high side, it’s now far more economical to just stay in and eat at home.

Additionally, McDonald’s has been feeling the pinch of geopolitical pressures. As the company focuses on affordability while driving efficiencies, I think its sales slump will be relatively short-lived. The recent flop in MCD stock back to $284 and change per share, I believe, is a great buying opportunity, especially if you’re a tad light on the defensive dividend payers.

With a 2.34% dividend yield and a 24.65 times trailing price-to-earnings multiple, MCD stock looks nothing short of intriguing, even if it’s destined for lower lows in the coming weeks. Remember, McDonald’s is a global leader with a brand that can shine through the decades. That alone leaves it worthy of a rich premium, not a discount!

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 Joey Frenette has positions in McDonald's and Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

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