The plain fact is that not everyone can be McDonald's
The throwback of the fast-food chains is Sonic
More good news for Sonic and its faithful investors: The company reported third-quarter earnings that were up 18% (year over year) and in line with expectations. The company's revenues fried the consensus estimate ($145.9 million vs. $141.5 million). Sonic also disclosed that this positive sales trend has continued in the first few weeks of June; the company's same-store sales growth has widely beat its target expectations of 2% to 4%. Going forward, the company also expects its total sales to grow in the range of 11% to 13% and its earnings expansion to approach 20%. That healthy double-digit growth translates into a lot of burgers and shakes being skated out to cars.
I agree with fellow Fool Rick Munarriz's comments in Sonic's Boom -- for a company supposedly serving burgers and fries in the shadow of McDonald's, Sonic is really holding its own. Fellow niche player Checkers
Sonic shares currently trade at about 19 times next year's earnings forecast of $1.19, which is in a comfortable range with its expected earnings growth. If you want to buy an industry leader, then McDonald's is your pick. But I would purchase Sonic if you have a yen for underdogs with rock-solid niche fundamentals.
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Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.