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Are These Stocks Bouncing Back?

However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.    

There are 105 stocks listed under leisure in the CAPS screener, but we've found more than a few with four- and five-star ratings. Those accolades mean many of our 165,000 CAPS members are confident these stocks will beat the market in the months ahead, but let's see what some members are saying about the ones below:


CAPS Rating
Today (out of 5)

Recent Price

52-Week Price Change

Estimated 5-Year
Growth Rate

McDonald's (NYSE: MCD  )





Melco Crown Entertainment (Nasdaq: MPEL  )





Yum! Brands (NYSE: YUM  )





Sources: Motley Fool CAPS and Yahoo! Finance.

The market hit the panic button, but that seems to be fading to a bad memory with the indexes rebounding these past few days. With the S&P 500 still up about 15% from a year ago, CAPS leisure stocks have almost matched that, with average returns of just 12%. Of course, companies like Melco Crown Entertainment and Penn National Gaming, both of which tumbled 30%, weighed down those returns. Conversely, Las Vegas Sands (NYSE: LVS  ) more than doubled in value over the past year, and online travel agent (Nasdaq: PCLN  ) was up 78%.

So let's take a closer look at why investors think that some of these other companies won't be jumping from the frying pan into the fire now that the market is up again.

Some spring in its step
The first indication we had that McDonald's isn't just a greasy burger joint anymore (assuming you forgot the whole McDLT fiasco) was its willingness to draw a line in the coffee grounds and not cede any more real estate to Starbucks (Nasdaq: SBUX  ) as the sole, go-to place for quality coffee.

Now the burgermeister is going after Jamba (Nasdaq: JMBA  ) with a new line of fruit smoothies. It might not have the depth of offerings the juicer does, but a tasty, cold fruit drink that's cheap to boot has already found traction with customers. A planned giveaway had to be canceled because management was afraid restaurants would run out. No need to cause an Oprah-like chicken stampede and anger your customers.

Of course, Yum! Brands was responsible when KFC ran out of chicken sandwiches after Oprah Winfrey had promoted the giveaway. And while it has been selling fruit smoothies for several years, too, it seems McDonald's also has the cache of being the value leader, which makes its drink that much more tempting.

CAPS member truthisntstupid calls an investment in McDonald's a "no-brainer," and Dnomyar220 writes that China may be the biggest draw.

McDonald's influx into China can only be good for the company, China represents an outstanding market that is currently underdeveloped for fast food. Also, the coffee is so good for the price, how can people not eat there...

That's the same rationale both taylor4u and rlane5 provide for their argument that Yum! Brands is also a good investment.

More expansion into China and plenty to choose from with their variety of restaurants. If people are having weddings at KFC in China, can 3 billion people be wrong?

Investing isn't an either-or game; there's room enough to own both these stocks. With the market putting similar valuations on both companies in relation to their growth prospects, both might be a worthy addition to your portfolio.

International markets are smokin'
If you're going to go all-in on China, though, then maybe gambling company Melco Crown Entertainment would be a good bet, too. In Macau, the casino mecca of China, gross gambling revenues rose 65% in June from the previous year. While that's down 20% from May's $2.1 billion, a record take on the spit of land, analysts attribute that to World Cup fever and say July's numbers will probably be soft, too.

However, they're looking for gambling receipts for August to resume the trend upward because it marks the start of the country's travel season. With 96% of the more than 1,300 CAPS members rating Melco Crown Entertainment picking it to outperform the broad market averages, it seems probable that the casino operator will grow from here. Go to the company's CAPS page and let us know what you think.

The ball's in your court
There are many factors that go into whether a stock is a buy or a sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other members on whether you think these stocks are ready to bound higher.

Starbucks and are Motley Fool Stock Advisor choices. Melco Crown Entertainment is a Motley Fool Global Gains recommendation. Motley Fool Options has recommended a bull call spread position on Yum! Brands. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey doesn't have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.

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Related Tickers

10/26/2016 4:00 PM
MCD $112.11 Down -0.61 -0.54%
McDonald's CAPS Rating: ***
MPEL $17.28 Up +0.51 +3.04%
Melco Crown Entert… CAPS Rating: ****
YUM $85.73 Down +0.00 +0.00%
Yum! Brands CAPS Rating: ****
JMBA $10.50 Down -0.10 -0.94%
Jamba CAPS Rating: **
LVS $58.02 Up +0.02 +0.03%
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SBUX $53.63 Down -0.04 -0.07%
Starbucks CAPS Rating: ****