3 Fast-Food Stocks Hungry for Growth

The fast-food industry is on fire, and Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) and others are eating it up.

| More on:
Female friends enjoying their dessert together at a mall

Image source: Getty Images

As the world becomes more focused on convenience, technology is providing simple solutions for those of us to get what we want faster and easier. This is especially true within the global fast-food market, where apps, ride-share programs, and technology are being introduced in ways that make it easier than ever to order up a meal. In fact, the global fast-food market is projected to rise from US$540 billion from 2016 to US$690 billion by 2022 — that’s 4.20% of annual growth!

It should come as no surprise that even during a market downturn, there are fast-food stocks continuing to do well, and that might be worth consideration when looking at what stocks to buy next for your portfolio.

Restaurant Brands

With three enormous fast-food chains under its belt, it’s no wonder that Warren Buffett has a stake in Restaurant Brands International (TSX:QSR)(NYSE:QSR). This company has continued to see tremendous growth in the past year, with almost 40% growth in share price year to date. While customers coming to eat in at its restaurants might be declining, the company is able to provide more options than ever to its clientele, and that doesn’t look like it’ll slow down any time soon.

With plant-based proteins on the menu, digital kiosks in store, and apps to pre-order meals, Restaurant Brands is making it easier than ever to order up. This has resulted in strong overall sales growth of 7.9% in the latest quarter, with adjusted net income demolishing analyst expectations of US$296 million and reporting US$331 million.

Premium Brands

So, a Warren Buffet stake is a pretty obvious option, but there are other companies doing incredibly well in this environment too. Premium Brands Holdings (TSX:PBH) is one of them. The company has seen strong growth so far this year, rising 25% as of writing.

While Restaurant Brands might have some strong companies on board already, Premium Brands is seeking further expansion through acquisition. It went nuts buying up companies back in 2018, and investors weren’t so sure about the company’s future, but since then investors have come back on board. The company specifically focus on protein and seafood, and so far this focus is working for them. The company recently reported record revenue of $945.4 million — a 24.1% increase from the same time last year.

Pizza Pizza

If you’re looking for a strong stock with a crazy dividend, then Pizza Pizza Royalty (TSX:PZA) is the stock you should definitely consider. That’s especially since it looks like it could be on the rebound after almost reaching $20 per share back in 2017, and dropping to about half since that time.

This is actually due to the points I addressed earlier, with apps providing more competition for a company like Pizza Pizza. But you can’t beat name recognition, and the company has since gotten back on track and reported the first positive same-store sales since 2017. So, while this stock could be a riskier bet than Premium or Restaurant Brands, it also has the best chance of seeing huge returns in the near future if shares can get anywhere near what they were only two years ago.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool owns shares of PIZZA PIZZA ROYALTY CORP and RESTAURANT BRANDS INTERNATIONAL INC and has the following options: short October 2019 $82 calls on RESTAURANT BRANDS INTERNATIONAL INC.

More on Investing