Fast Food Stock Picks from TheStreet.com’s Debra Borchardt

Read the companion article from TheStreet.com: Hamburger Stocks Worth a Nibble.

TOM HUDSON: Stocks like Chipotle Mexican Grill (NYSE:CMG), Panera Bread
(NASDAQ:PNRA) and even McDonald`s (NYSE:MCD) have been on a tear, all
hitting new highs this year. That brings us to tonight`s “Word on the
Street,” — restaurants. Debra Borchardt is a markets analyst at
thestreet.com. She`s with us at the NASDAQ. So Debra, unemployment rate
still over percent. The U.S. economy still struggling to get
What is attractive about restaurant stocks in that environment?

DEBRA BORCHARDT, MARKETS ANALYST, THESTREET.COM: Here`s what`s
happening. As you mentioned, we do have a recessionary type feel to our
economy. But people still want to go out to eat. We are seeing two key
trends happening in the markets right now with fast casual like you
mentioned, Chipotle and Panera Bread (NASDAQ:PNRA), where you get to go out
to eat but it`s nicer than McDonald`s or Wendy`s and you haven`t spent a
ton of money but you feel like you have gone out to a restaurant. And then
we`ve also seen a big craze in burgers again. A lot of private chains are
doing this, Five Guys, Smash Burgers, so what I did was I tried to find a
food stock that hadn`t really moved up like a Chipotle or a Panera, but
still could take advantage of these trends.

HUDSON: Hamburgers are hot, no doubt about it, one of those you
spotlighted here, Red Robin Gourmet Burgers (NASDAQ:RRGB), RRGB. It moved
up nicely in the low 20s here into the mid 30s, but not and all-time high.
Does that tell you that the market in investors are late or perhaps the run
is getting exhausted.

BORCHARDT: I do think that there is still room to move here in the
stock and here`s why. They have a concept that they`re developing called
burger work and it`s their answers to, like I mentioned, the Five Guys, the
Smash Burgers, because it`s fresh and it`s new. Now. Red Robin will do well
with the whole burger concept. I think it`s going to be lifted along with
all these other burger concepts.

HUDSON: Find buyers then. You also spotlighted BJ Restaurants. This
is a company involved with the brewery business as well. This stock in the
low 50s is close to a new high tonight.

BORCHARDT: I guess they heard me talking about it. Here is the thing
about this
company. It`s a little nicer bit than the fast casual. So it is more of a
restaurant. But as I mentioned, they`ve got these breweries in the
restaurant. And so they are really building off of the craft beer craze.
We`ve seen anything associated with craft beer is taking off and the chain
has a real non-chain image. So each restaurant will look different. It
doesn`t look like it`s part of a chain.

HUDSON: Debra, do you own either of these two stocks?

BORCHARDT: I don`t.

HUDSON: You can read Debra`s article, “Hamburgers Are Hot Again.”
It`s at thestreet.com, a link on our website as well. Our guest this
evening, Debra Borchardt. She`s with thestreet.com.


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