BLMN - Better Buy: McDonald's vs. Bloomin' Brands
When picking stocks to invest in, it pays to focus on high-quality companies over a time frame long enough to let you ignore the noise. Restaurant stocks are typically tough businesses, but I think investors could benefit and improve their skills by analyzing both McDonald's (NYSE: MCD) and Bloomin' Brands (NASDAQ: BLMN) and choosing one.
McDonald's has historically been a good business to own, more than doubling in the five-year period ending Feb. 20, just before the coronavirus pandemic began roiling markets. Still, at Tuesday's close, the stock was only 15% off its yearly high set on Feb. 12. After monthly comparable-store sales, or comps, tumbled 39% in April compared to the same period last year, May showed some improvement. 95% of the company's restaurants globally are back open as of June 15, which should boost those comps in coming months.
Bloomin' Brands, which owns casual chains (Outback Steakhouse and Carrabba's Italian Grill) and more upscale eateries (Bonefish Grill and Fleming's Prime Steakhouse & Wine Bar), has had a more dramatic reaction to the pandemic. The market is clearly punishing the cyclical nature of the business, as the stock is 56% off its 52-week high.