If you're like most Americans, you're making do with leftovers instead of heading to restaurants every day and your most recent leisure travel was scaled down in terms of duration and/or grandeur. Our still-challenging economic landscape has many companies in the hotel, restaurant, and leisure industries poised to profit from changing customer habits while others teeter on the verge of collapse.
All that makes the industry among the most-watched by investors, and now we're able to determine the individual companies that are garnering the most attention.
The most watched
People watch stocks for different reasons: They're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless, we can take several steps toward understanding market sentiment by seeing who's watching what. With the Fool's free My Watchlist service now 3 months old, we have tens of thousands of people telling us the businesses that have, for whatever reason, piqued their interest.
Looking at the aggregate data, here are the five companies in this area that have earned the most attention. The third column shows the sentiment (out of five possible stars) in Motley Fool CAPS, our free investing community, and the fourth shows the percentage of people with an eye on this industry in general who are watching each company.
|
Company |
Market Cap |
CAPS Rating (out of 5) |
Percent Watching |
|---|---|---|---|
|
Yum! Brands |
$23.3 billion |
**** |
18.0% |
|
Panera Bread |
$3.1 billion |
** |
17.7% |
|
Starbucks |
$24.2 billion |
** |
12.7% |
|
McDonald's |
$81.5 billion |
**** |
10.4% |
|
Chipotle Mexican Grill |
$6.9 billion |
** |
6.7% |
Yup, all five are purveyors of quick-and-easy food and drinks. Hotels, resorts, amusement parks, casinos, travel agents, fancy restaurants, and a host of other companies filled out the roster of 127 players categorized as hotels, restaurants, and leisure providers, but none were on the watchlist of more than 5% of the total for the industry -- Ctrip.com International
But the story here is Yum!, the company behind KFC, Taco Bell, and Pizza Hut. As Jeremy Phillips recently wrote when he named it one of his three perfect dividend stocks for a 2020 retirement, "…Yum will continue to spread its KFC deliciousness throughout China and into emerging markets. This will throw off plenty of cash and keep that dividend growing year after year. By getting in now, your 2020 yield on today's investment should be quite substantial -- not to mention the great chance for stock price appreciation."
Three others on the list were deemed expensive but worth a look in a recent article by April Taylor:
No matter how you look at it, Chipotle, Panera, and Starbucks are expensive stocks trading at multiples well above the market average. All three have generated home run returns for investors in 2010 and the resulting price multiples are as rich as a holiday meal. ... The restaurants have delivered a sweet and spicy blend of growth, returns, and balance sheet strength, deserving of a premium valuation. Add to these figures the fact that all three companies have passionate founders still guiding the sleigh, a demonstrated willingness to return cash to shareholders via a dividend in the case of Starbucks or share buybacks in the case of all three, and well-regarded brands that should continue to increase in consumer awareness and relevance, and you have three stocks that are difficult to dismiss.
They might all be a bit pricey at the moment, but all three dropped to irrationally low levels during the financial crisis, and that price drop could conceivably happen again. Whether you're hoping for a lower price, biding your time, or watching to see how the economy recovers, it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, new and free from the Fool. Click below to start following one of the stocks mentioned above:
