Consumer Sector Ideas

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Texas Roadhouse (TXRH) - >>> Don't Mess With This Texas Fast-Food Growth Stock After Sales Rise 100%


Investor's Business Daily

VIDYA RAMAKRISHNAN

04/13/2023


https://www.investors.com/research/growth-stock-txrh-doubled-its-revenue-in-less-than-five-years/?src=A00220


Restaurants have produced dozens of surprise winners over the decades, including Starbucks (SBUX) and Chipotle Mexican Grill (CMG). But it's gotten harder to uncover the best plays in this feast-or-famine market group. Enter growth stock Texas Roadhouse (TXRH), which is in a buy range after a breakout to all-time highs.

In January, TXRH shares rallied out of a flat base with a 101.85 entry in strong volume. Multiple tests of the 10-week line confirmed solid support as the stock headed up. The impressive Composite Rating of 96 signaled impressive strength while the 80 Relative Strength Rating met the requirement for growth stocks.

Growth Stock Revenue Doubles In Five Years

This fast-food growth stock has posted solid revenue growth over seven quarters. Sales have been on a tear, doubling to $4 billion in 2022, just five years after it hit the $2 billion mark.

Earnings have been in an uptrend in recent quarters as well, with Q4's profit of 89 cents per share up 17% year over year. The 55 cents per share dividend makes this issue even more attractive.

Higher sales offset lower margins in 2022, falling to 15.7% of sales due to inflation in both goods and wages. For 2023, the company expects further growth underpinned by higher menu prices.

Kentucky's Texas Roadhouse specializes in steaks, operating 697 owned and franchised restaurants across 49 states in the U.S. and 10 countries. This growth stock plans on expansion, buying up franchisees as company-owned stores are outperforming franchisees.

In 2022, it bought eight franchisees including key purchases in South Carolina and Georgia. The growth stock also benefits from its fast-casual chain Jaggers, which serves burgers, salads and shakes. and the Bubba 33 family restaurant chain.

Texas Roadhouse is in the Retail-Restaurants group, which holds 67th place among IBD's 197 industry groups.

Fund ownership stands at 61% of total outstanding shares.

Exchange traded funds own the stock as well with iShares Core S&P Mid-Cap (IJH) and the Vanguard Small Cap ETF (VB) hold positions.

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