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2 Nasdaq Stocks Poised to Win in a Post-Pandemic Recovery

By Dan Caplinger - Sep 24, 2021 at 2:12PM

Key Points

  • The Nasdaq was largely flat on Friday.
  • Costco shares rose after solid earnings from the warehouse retailer.
  • An upgrade for restaurant stocks lifted shares of Chuy's Holdings.

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On a mixed day for the markets, these stocks moved higher.

The stock market was largely flat on Friday, taking a rest after a turbulent week. The Nasdaq Composite ( ^IXIC 0.30% ) was down slightly shortly after noon EDT, but it had bounced back considerably from larger losses earlier in the session.

The American consumer plays a key role in driving the U.S. economy forward. Today, investors in Costco Wholesale ( COST -2.22% ) reacted positively to the warehouse retail-giant's latest earnings results. Meanwhile, in the restaurant field, Chuy's Holdings ( CHUY 4.41% ) delivered solid gains in its stock price. Below, we'll look more closely at both stocks to see what's happening and what the future might hold.

Costco stretches toward all-time highs

Shares of Costco Wholesale moved higher by nearly 3% early Friday afternoon. The big-box retailer's fiscal fourth-quarter financial performance sent the stock upward to just shy of record levels.

Two people shopping at a warehouse retailer.

Image source: Getty Images.

Costco's numbers reflected the brand dominance the warehouse retail-chain commands. Revenue climbed 17.5% for the quarter and 17.7% for the full year from previous-year periods, with total sales for fiscal 2021 coming in above $192 billion.

Comparable sales were extremely strong, with gains of 15.5% overall and 9.4% after accounting for the rise in gasoline prices since last year. U.S. stores performed the best in U.S. dollar terms, although Canada and other international locations had solid performance on a local-currency basis.

Costco's bottom line was also strong. For the full year, net income topped $5 billion, up 25% from the $4 billion figure from fiscal 2020.

In general, investors are pleased with the way Costco has handled challenging situations. The reimposition of purchase limits on paper towels and bottled water signals the uncertainty of when the COVID-19 pandemic will truly be under control. However, the retailer hopes to maintain attractive pricing while sustaining its margins in light of higher costs, and that's good news for shareholders.

Hungry for more

Meanwhile, shares of Chuy's Holdings were up nearly 6%. The Austin-based Tex-Mex restaurant chain found itself receiving favorable reviews from stock analysts.

Jefferies ( JEF -1.49% ) weighed in on Chuy's, upgrading the stock from hold to buy. Analysts there boosted their price target on Chuy's stock by $5 to $41 per share.

The upgrade was part of a larger set of positive comments aimed at several key players in the restaurant industry, with BJ's Restaurants ( BJRI 5.88% ), Dave & Buster's ( PLAY 9.70% ), and Cheesecake Factory ( CAKE 4.56% ) also getting upgrades. Jefferies is convinced that concerns about cost inflation and the potential impact of the delta variant of COVID-19 have led to an overreaction in selling off restaurant stocks. In the long run, analysts believe that Chuy's and its peers should be able to bounce back as strong demand from dining patrons remains pent up to a significant extent.

Chuy's took a huge hit early in the pandemic, but investors have looked forward to a big bounce from the Tex-Mex chain for a long time. From a fundamental perspective, Chuy's business still needs to return to a sustainable growth trajectory. However, forward-looking shareholders are increasingly hopeful that the worst is now behind Chuy's, and it can take advantage of hungry customers to restore its pre-pandemic growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.

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Stocks Mentioned

Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$529.99 (-2.22%) $-12.03
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$15,734.26 (0.30%) $47.34
Chuy's Holdings, Inc. Stock Quote
Chuy's Holdings, Inc.
CHUY
$29.98 (4.41%) $1.26
Jefferies Financial Group Inc. Stock Quote
Jefferies Financial Group Inc.
JEF
$38.91 (-1.49%) $0.59
BJ's Restaurants, Inc. Stock Quote
BJ's Restaurants, Inc.
BJRI
$36.75 (5.88%) $2.04
The Cheesecake Factory Incorporated Stock Quote
The Cheesecake Factory Incorporated
CAKE
$42.40 (4.56%) $1.85
Dave & Buster's Entertainment, Inc. Stock Quote
Dave & Buster's Entertainment, Inc.
PLAY
$36.31 (9.70%) $3.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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