Stifel analyst Paul Westra expects the U.S. economy to fall into a recession within the next three to nine months. In a series of new notes out on Tuesday, he explains why the U.S. economic downturn will be bad news for restaurant stocks.
Westra turned bearish on restaurant stocks for three reasons:
- Stifel sees Q2 comp deceleration across every industry sector.
- Historically, restaurants have endured at least two years of negative Relative Pricing Power at the beginning of cyclical downturns.
- In the year prior to the last three U.S. recessions, restaurant stocks have declined an average of 23 percent.
“Restaurant stocks are monolithic as ~75 percent of names tend to outperform/underperform together throughout a business cycle – such that getting the ‘sector call’ correct represents the vast majority of the potential alpha creation,” Westra explained.
A Few Names
Stifel downgraded…
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