(via ZEXPR) We’re going to discuss the recovery stocks that are expected to have some massive upside as the economy begins to reopen. London-Gates’s broker says, with multiple vaccines getting distributed across the country and the States easing pandemic restrictions, we have seen a shift in investor sentiment.
Over the past few weeks, NASDAQ has dropped 10% as investors seem to be shifting their capital out of big tech that led the market rally in 2020 and is now focusing on the stocks that center benefit from further economic reopening.
Once we return to normal, that is when the pandemic will be over, consumers are going to be very well prepared. At this current point in time, we were at, one of the highest personal saving rates in history with above 20% and going forward with the potential of another stimulus deal, there is going to be trillions of dollars of excess capital flowing through our economy over the next few months.
So, in this article, we are going to focus on just 1 recovery stock that comes from the restaurant industry in the market and has an upside to continue to grow over the long term.
When you think of recovery stocks, there are 2 main categories, where this name could fall under. The first category is the brands, that are directly tied to the actual reopening of the economy and consumers leaving their homes.
Those sectors include airlines, hotels, restaurants, and casinos. In the second category, are the companies who are generally tied to the overall recovery of the economy and that includes the banks that consumer finance broad-based apparel trucking and many more so.
In this article we will be going over just 1 company that falls into those unique categorizations and is going to benefit from further economic reopening, which is expected throughout 2021 and into 2022.
Darden Restaurants (DRI):
We’re going to take a look at Darden Restaurants (DRI), they currently trade for $140.00 and are up close to 60% over the trailing 12 months. Darden owns multiple different restaurant chains that are spread out all across the country, in some names include the Olive Garden, Longhorn, Cheddar’s Scratch Kitchen, and many more.
Darden now operates more than 1800 restaurants all across the country and throughout the pandemic, Darden has invested a ton of capital into growing all their restaurant chains, digital technology, and in their ecosystem.
They have very well improved ordering online, curb side pickup, and weightless visibility options for in-person dining, and taking a look going forward this restaurant got a ton of positive news because as they start to allow indoor dining once again we’re expecting consumer pickup to grow out of massive rate.
As consumers are saving more money than ever and are poised to spend it at consumer favorites like the Olive Garden, over the next 6 to 12 months. Taking a look at the company’s financial statement before the pandemic, they were growing at a very nice rate year over year.
It is observed that before 2020 every single year, the company continued to grow its total revenue and has reached a high of eight and a half-billion dollars.
Throughout the 2020 year, Darden has seen declines as of late but hoping that recovery can continue, and they can reach record highs. Darden was a profitable company, each year they were able to grow income following the trend in the revenue with a high of over $700 million but of course, then 2020 hit and they posted a slight net loss of around $52 million.
Although in the trailing 12 months that loss has accelerated now up to $115 million in the red and although this company has been going through some tough times, Darden is still considered a buy.
30 analysts were surveyed, we have 6 strong buys, 15 buys, and 9 holds. Over the past six quarters, even though the global pandemic, that almost destroyed the restaurant industry, this company was still able to post better than expected results each in every time.
Going forward in the 2021 fiscal year, annals are projecting a slight decline in revenue once again and then a rebound into 2022. For the next five years in the future analysts projecting over 34% per year growth which would be amazing.
Taking a look at Darden Restaurants, they are the company that owns names such as Olive Garden, Longhorn, and Cheddar’s.
Hopefully, as the Russian industry continues to reopen, the share price can continue to climb to record highs so, do some research into this company going forward.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.