The 5 Restaurant Stocks in Canada that You Should Invest In
Many restaurant stocks will be re-entering the stock market with better trajectories and more promising financial prospects. In addition, many of these restaurants have fast growth and increasing momentum. Here are the five most significant restaurant stocks in Canada you should invest in.
Restaurant Brands International Inc. (TSX: QSR)
If you’ve ever explored the restaurant space in Canada, you might have come across the name of Restaurant Brands International. This Canada-based multinational corporation is a fast-food holding company. RBI is arguably the biggest name in the restaurant industry, raking more than $4.97 billion in profits during the fiscal year 2020. The company owns three of the most famous fast-food chains in Canada: Popeyes, Burger King, and Tim Horton, contributing to most of its organic growth and sales.
RBI is the world’s largest quick-service restaurant that has earned more than $32 billion in worldwide sales during the last financial year. These sales are either made online or from their 27,000 restaurants spread across a hundred countries. The company is showing no signs of stopping; with its R&D department in top gear, it plans to offer a plant-based menu for its vegan clientele.
The company is also rapidly funnelling money to modernize its branches. During the covid-19 pandemic, restaurants with delivery and drive-thru options fared much better than those without these services. And RBI ensures that customers can avail themselves of these services whenever they visit this restaurant.
As far as the financials are concerned, RBI has consistently shown strong numbers. The company has a consensus rating of Buy and has reported a net income of $257 million in Q1. During the same quarter, the company generated a revenue of $1.26 billion with an EPS of $0.05, 9% more than the market consensus. As of now, the company has an EPS of 2.73 with a healthy P/E ratio of 30.10. Trading at $81.92 on 16th September at 1:01 pm PDT, you won’t regret investing in this stock.
Pizza Pizza Royalty (TSX: PZA)
Pizza Pizza Royalty is a Canada-based quick-service restaurant and a fast-food chain that was founded in 1957. The company has over 500 locations in Canada, which is expected to increase in the coming years. During this pandemic, the company has focused on network expansion, delivery promotions, consumer service, and increasing its online presence. This has allowed this company to shield itself from the economic recession caused by covid-19. Although this company is currently facing low traffic in its restaurants, stock analysts predict that this company’s financials will improve once lockdowns ends and restrictions ease.
The lion’s share of the company’s profits comes from food delivery; this is one of the reasons that this company has been able to stay afloat relatively quickly during lockdowns. In addition, Pizza Pizza Royalty raised its dividend just last month, which shows how confident its hierarchy is in its financial prospects. The company currently offers a dividend worth $0.06, which translates into a stellar dividend yield of 6.4%.
The only downside to this mouth-watering dividend is that analysts predict that this high dividend might slow down the rate of future earnings growth. However, if the company maintains its profits and continues to offer a dividend at this price, there is no telling how high this stock can go. If this stock succeeds in maintaining its dividend, it will be one of the most sought-after stocks in the market.
The stock price of Pizza Pizza is $11.32 at 1:30 pm PDT, and a robust P/E ratio of 15.40 is enticing Canadians to put in their investments in this promising stock.
Recipe Unlimited Corporation (TSX: RECP)
Founded in 1883, Recipe Unlimited Corp. is America’s oldest full-service restaurant company. This multinational company operates various restaurant chains such as The Keg, Swiss Chalet, and Harvey’s. The company has over 1300 restaurant locations in Canada and 61 more in other countries.
Recipe Unlimited has an ROI of 19%, which is higher than the industry average of 13%. This is a positive sign for Recipes Unlimited, but the debt of CA$556.7million poses a risk. The company has a market capitalization of $442 million and has a P/E ratio of 18.
Currently trading at $19.54 (3:40 pm PDT), its recovery potential makes this stock attractive. This company is still dealing with the covid-19 pandemic and has taken several measures to cope with the economic downturn. The company has closed underperforming and bleeding restaurants and has opened 42 new restaurants with better business potential.
The company reported net earnings of $19.4 million in the second quarter of 2021. This is a decent number, considering that this figure was achieved while facing the strictest dining-in restrictions and outdoor gatherings.
The company’s conversion of EBIT to free cash flow signals promising returns to investors. However, the critical factor that will decide whether this stock is worth investing in or not is liquidity. Therefore, investors interested in putting their savings in this stock must keep an eye on its balance sheet and liquidity figures.
MTY Food Group Inc. (TSX: MTY)
The stocks of MTY Food Group caught every investor’s eye when they announced an 89% increase in their stock price. During the same month, analysts also found out that MTY Food’s revenue has grown at a steady pace of 30% over the last five years. In addition, four days ago, Yahoo Finance reported that those who invested in MTY Food Group a year ago had seen their stocks rise by 81%. If the stock keeps on doing this well, investors will be getting hefty returns.
MTY Food Group is a Canadian operator with headquarters in Quebec. Consisting of several brands, MTY Food excels in casual dining, quick-service, and fast dining. This company has several long-term investors who benefited from this company’s recovery from the pandemic.
Despite the delta variant wreaking havoc, stock analysts predict that MTY Food will not diminish in value. On the contrary, several food courts and restaurants are gaining traction, and with Canadians out to dine, this stock has a bright future.
MTY Food Group is one of the expensive stocks on this list. Currently trading at $67.84, this stock has a dividend of 0.185 CAD. With the healthy P/E ratio of 21.10 combined with a monumental market cap of $1.67 billion, analysts believe this is the right time to invest in this stock.
SIR Royalty Income Funds (TSX: SRV.UN)
SIR Royalty Income Fund owns several service-inspired restaurants through SIR Royalty Limited Partnership. It is a publicly traded fund that follows the laws of Ontario, Canada. The fund’s concept brands include Jack Astor’s Bar and Grill, Canyon Creek, Scaddabush Italian Kitchen, and Bar, among several others.
This restaurant stock is currently trading at $10.82 (4:56 pm PDT). Although some parameters such as P/E ratio and EPS are not very promising, stock analysts believe that this stock can turn profitable in the near future.
Few Essential Details
Market Cap: 90 million
P/E Ratio: -6.00
Dividend: 0.09 CAD
Dividend Yield: 9.928%
The quick-serve restaurants under the umbrella of this company will become more profitable as soon as the economic downfall subsides.
Why You Should Invest in Restaurant Stocks in Canada
None of the industries that faced a crushing recession in 2020 due to the Covid-19 pandemic have met a stiffer recovery than the restaurant industry. Repeated lockdowns, diminishing clientele, and soaring expenditures caused several restaurants to go under during these testing times. However, those restaurant stocks which survived this economic downfall present a lucrative opportunity for investors.
Despite severe economic pressure, these restaurant stocks managed to stay afloat and now have colossal recovery potential. This makes them ideal stocks to invest in. Many restaurant stocks on TSX are way too cheap right now, and they can bring you massive returns if you play your cards right. The industry is slowly regaining its footing in the economic space, and stock analysts predict that this is the right time to dive into these stocks and benefit from the recovery.
The Final Word
The restaurant industry is brimming with stocks that you can invest in. Since we are unaware of your financial goals, monetary conditions, and savings, we cannot suggest a stock that would prove to be the best fit for you. Investors should eye the best performing restaurants such as Restaurant Brand International Inc. However, there are several other restaurant stocks with lucrative returns that will be worth your money.
Canadian Restaurant Stocks
Capriotti’s Sandwich & Sandwich Store, known for its award-winning handmade sandwiches, has been named the 47th best fast-casual brand for 2021. At the top, we limited our search to six restaurant stocks that delivered the highest returns from the benchmark S & P 500 index in April. The loser of these three stocks can replenish their portfolios during the recovery. Analysts praise benchmark Taiex at Suisse for compiling a list of the best Canadian stock picks over a six to twelve-month period.
You cannot separate the outlook of restaurant stock from the pandemic and the road to recovery. Here are the top 3 restaurant stocks with the best value, fastest growth and most outstanding dynamism. These are the lowest price-to-earnings (CAGR) shares in 12 months.
Restaurants, both independent chains and franchises, have seen sales and profits fall amid the pandemic. As a result, more than 110,000 U.S. restaurants have closed, according to the National Restaurant Association. Recovery is in sight, but the gridlock in the IT and restaurant industries presents an opportunity for stock traders.
Restaurant stocks were dizzy compared with the S & P 500, which gained more than 16% last year. Shares in major restaurants and coffee chains were bought at a discount if there was any prospect that customers would return once the economy reopened.
Organic growth of 10% to 12%, driven by sales growth at Popeyes, Burger King and Tim Hortons, accelerated after a difficult 2018. Joseph A. Christian’s closure of non-essential stores on May 17, 2021. Restaurant stocks fell last year before the pandemic but are now trading higher as chains have had a positive year thanks to limited service, RB Bottom Line says.
Stan Wong is bullish on QSR, considering it a defensive hold due to its low beta. James Hodgin believes the dividend is generally safe but expects mid-sized Canadian consumer companies, in general, to be in jeopardy if the housing market continues to roll. Finally, Peter Hodson has mixed feelings when he says BPF is a good hold with a hefty dividend, but it won’t fill you with growth.
Its shares have fallen 11% year-on-year since late morning trading on February 12. Today I would like to look at three of the best restaurant stocks we can add in mid-February. Looking ahead to the end of winter, the reopening is a positive step.
I warned investors that stocks were dangerous to hold during the pandemic. There is no question that restaurants will look very different after COVID-19 than they did before the crisis. But it’s not just the way restaurants treat customers that will change.
One of the things restaurants can learn from the pandemic is to make it as easy as possible for customers to order their food online. Alternative channels such as delivery, curbside, digital, and drive-through were critical to many consumers’ “behaviour during this pandemic, and it looks like they will remain so. The winners will be restaurants with strong brands that attract customers and do a good job replenishing those channels.
On February 25, Meats announced that it had signed a three-year strategic agreement with McDonald’s to make Meats the preferred supplier of McPlants patties tested in Mcdonald’s restaurants. Meat continues to sign contracts with global restaurant chains to supply its products.
Restaurant Brands International (QSR: T) remains the King of Canadian Resto shares and holds under its large umbrella Timmys, Popeyes and Burger King. Greg Newman believes the company is recession-proof because people are buying fast food again.
Restaurant Brands International (QSR: T) has ambitious plans to expand from 26,000 to 40,000 stores over the next decade. Edmonton Restaurant Group owns seven restaurant brands in Western Canada, from Minneapolis to Halifax. MTY Foods (MTY) – $16.9 billion $17.67 billion Mty Foods is a franchisor in the restaurant industry in Canada and the United States.
Eggspectation is a Montreal-based restaurant chain focused on breakfast and brunch. East Side Marios is an Italian restaurant chain based in Mississauga, Ontario. Outdoor Works operates as a licensed casual dining restaurant chain with full service based on street signs, street lamps, traffic lights, fences, tools and water meters.
The Canadian breakfast and lunch restaurant chain were founded in Saint-Laurent, Quebec, in 2008 and opened its first restaurant in Vaudreuil-Dorion, Quebec. In 2012, the restaurant chain expanded into Ontario  and had 31 locations by 2014. The chain began serving an extensive breakfast/lunch menu and extended its opening hours to include a selection of dinners.
Yum Brands China is today the exclusive owner of KFC, Taco Bell and Pizza Hut across the country. However, if there is an authentic Mexican restaurant in your neighbourhood, Chipotle Mexican Grill (CMG: 142082) may be your best choice. Since Smitty’s family restaurants in the 1960s, it has operated 82 restaurants in Canada and was one of the first model franchise restaurants in the United States.
It pays a generous dividend yield of 4.43 percent, which grows at 5 percent a year based on good free cash flow. In western countries, most mid-to-high-end restaurants serve alcoholic beverages such as beer and wine.