Tuesday, April 28, 2009

As Restaurants Stay Hot, Watch MRT and RUTH

Two months ago, the only restaurant investors were talking about was McDonalds (MCD). Within the last month, many other restaurant chains have outperformed the market handily, such as Darden (DRI) and Panera Bread (PNRA).

Yesterday, we saw stand-out numbers for casual diner PF Chang's China Bistro (PFCB) and a great move for Buffalo Wild Wings (BWLD).

So, which restaurants might be next to join the party? More business-oriented ones such as Mortons (MRT) and Ruth's Chris (RUTH). Both cater to the business exec entertaining clients. They've suffered with the general downturn even more than the consumer-oriented chains. Turns out the business execs (or at least their CFOs) are more frugal about their steaks than families are about going out for a sit-down at their local Olive Garden in tough times.

Looking at MRT and RUTH, you can see both have lagged other chains over the last 6 - 12 months. If things continue to stabilize in the broader economy, look for these two to make a comeback relative to their consumer-oriented peers. RUTH has already made a good move in the last month (but beware its debt levels).

Position: None.

Originally published in RealMoney.com on 4/23/2009 3:35 PM EDT

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