Big Money’s Top 5 Restaurant Stocks

[View in browser]( [The Spill Logo] BROUGHT TO YOU BY: [Logo]( Proprietary Data Insights Financial Pros’ Top Restaurant Stock Searches in the Last Month Rank Ticker Name Searches #1 [SBUX]( Starbucks Corp 58 #2 [CMG]( Chipotle Mexican Grill 44 #3 [MCD]( McDonald's Corp 39 #4 [DPZ]( Domino's Pizza Inc 7 #5 [SHAK]( Shake Shack Inc 6 #ad [Your Money, Your Answers: The Juice Perspective]( Brought to you by [Stansberry Research]( [Americans over 50 – prepare for a new dawn]( [Stansberry Research - Americans over 50 – prepare for a new dawn]( CNBC's Jim Cramer once said: "I learned a long time ago not to be on the other side of a Chaikin trade." Since Chaikin accurately predicted the 2012 Priceline collapse, the 2020 crash, and the 2022 bear market, over 1 million people have chosen to follow his Wall Street warnings. Today he's stepping forward with a new warning – one he's never shared with the hedge funds, banks, and brokerages he worked with over 50 years on Wall Street. "A new dawn is coming to the U.S. stock market," says Chaikin, who's traded through nine bear markets. "It's time to throw out the investment blueprint of the last decade and prepare for a massive shift." [Click here to access his new warning, and #1 stock recommendation.]( Should You Hold Starbucks (SBUX)? Starbucks (SBUX) surprised investors when it said same store sales declined last quarter for the first time since the pandemic. This was a rare miss for a company that’s steadily grown ~10% every year. But it could have been worse… Comparable transactions were down 22%, partially offset by a 10% increase in average ticket price. Unsurprisingly, traders hammered the stock and have yet to let up. However, the stock is now trading at a historically low valuation. So, is it worth keeping in your portfolio? Starbucks’ Business The Seattle coffee chain set the standard for mass caffeine brewing. People used to joke there were so many Starbucks, you could leave one and find yourself staring at another across the street. Today, the company is a global restaurant behemoth serving coffee and food to the masses with more than 18,000 stores in the U.S. and over 20,000 internationally. Starbucks reports its business along those same lines, with the U.S. accounting for 78% of total sales. [Results] [Source: Starbucks Investor Relations]( Most stores are owned and operated, though a small chunk are franchised. The latest earnings call didn’t inspire much confidence as management forecast negative growth for the remainder of the year. However, new store growth should help boost overall revenues. Financials [Financials] Source: Stock Analysis Starbucks is one of the most consistent restaurants stocks we’ve covered, with margins holding relatively steady over time. The one knock we see is the large debt increase in 2020, when total debt jumped from $11 billion to $25 billion. It has yet to pay that down. However, that debt is only costing them around $200 million extra annually. So, it makes sense they’d put more money towards their 3% dividend and share buybacks. Valuation [Valuation] Source: Seeking Alpha Relative to its peers, Starbucks trades at just 13x operating cash flow, almost half that of McDonald’s (MCD), which didn’t have such a great quarter either. However, forecasts put Starbucks at 18x forward cash flow, which isn’t so hot. It’s also interesting to see its price-to-sales down at 2.3x, 40% lower than its 5-year average. Growth [Growth] Source: Seeking Alpha Suffice to say, Starbucks’ slowdown is unusual. Typically, the company consistently grows sales every year. And lately, it’s been able to do so while keeping margins steady. That’s driven higher profitability and greater cash flow. Profitability [Profit] Source: Seeking Alpha It’s interesting to see Starbucks run one of the lowest gross margins of the group. Chipotle Mexican Grill (CMG), for example, is over 40%. However, Starbucks has the second best free cash flow margins next to McDonald’s. [Beyond Traditional Investments: Embrace Diversity]( Don't limit your investment horizons to stocks alone. Venture into the realm of AI, Real Estate, Private Equity, NFTs, and more! Our financial experts curate a diverse range of alternative investment content. [Sign up for FREE and broaden your investment knowledge with The Alt.]( Our Opinion 9/10 We believe the latest pullback in Starbucks creates a buying opportunity. While sales could slide further in the coming quarters, growth should resume within the next 12-18 months. So for a patient investor, this slow drip is worth the wait. 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