MCD - Domino's Texas Roadhouse and First Watch headline Citi's best restaurant stocks list

Citi took a broad look at the restaurant sector on Tuesday and initiated coverage on a large number of stocks. Analyst Jon Tower said a once euphoric reopening feeding frenzy on restaurant stocks is now a purge amid the concerns over supply chain disruptions, labor shortages and the impact of excessive inflation. Still, opportunities are seen for investors with restaurant category leaders trading at attractive valuations. The overall industry view from Citi on the restaurant sector is that consumers will push through near to medium-term inflationary pressures, with the backdrop of strong wage and jobs growth fueling spending power, grocery inflation providing some air cover and discretionary wallet share shifting back to services/restaurants from durables. However, there is caution sounded on Street estimates for the second half of 2022 and into 2023, especially if commodity markets don't reverse. Tower and team see the most upside opportunity in stocks where improving

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Domino's, Texas Roadhouse and First Watch headline Citi's best restaurant stocks list