4 Solid Stocks to Invest in as Restaurant Sales Jump in June

Industry Overview - The U.S. restaurant industry demonstrated resilience in 2023 despite challenges such as rising food costs, inflation, and higher wages [1] - Inflation, which had declined sharply in 2023, began to rise again in early 2024, impacting sales and traffic [1] - Restaurant sales increased by 0.3% sequentially and 4.4% year-over-year, driven by solid consumer spending and rising personal income [1] Challenges and Strategies - Restaurant owners are focusing on digital innovations, sales-boosting strategies, and cost-cutting measures to overcome current challenges [2] - Major restaurant chains are partnering with delivery services and digital platforms to enhance sales [2] - The industry anticipates benefits from the Federal Reserve's planned 25 basis point rate cut, which is lower than previously projected cuts [2] Interest Rate Projections - The latest FOMC "dot plot" indicates a potential total reduction of 1% in interest rates by 2025, possibly lowering the Fed funds rate to 4.1% by the end of next year [3] - Lower interest rates are expected to ease food costs, positively impacting the restaurant industry [3] Investment Opportunities - Investment in restaurant stocks is recommended, with a focus on four companies: The Cheesecake Factory Incorporated (CAKE), Brinker International, Inc. (EAT), Wingstop Inc. (WING), and Texas Roadhouse, Inc. (TXRH) [4] - These stocks have shown positive earnings estimate revisions in the last 60 days and carry Zacks Rank 1 (Strong Buy) or 2 (Buy) [4] Company Highlights - The Cheesecake Factory Incorporated (CAKE): Expected earnings growth rate of 17.8% for the current year, with a Zacks Consensus Estimate improvement of 1.3% over the past 60 days [5] - Brinker International, Inc. (EAT): Expected earnings growth rate of 45.2% for the current year, with a Zacks Consensus Estimate improvement of 4.3% over the past 60 days [5] - Wingstop Inc. (WING): Expected earnings growth rate of 39.5% for the current year, with a Zacks Consensus Estimate improvement of 2.1% over the past 60 days [7] - Texas Roadhouse, Inc. (TXRH): Expected earnings growth rate of 33.3% for the current year, with a Zacks Consensus Estimate improvement of 1.5% over the past 60 days [7]