Wedbush analyst lays out his bull case for the restaurant stocks

Now is a suitable time for investors to start adding restaurant stocks to their portfolio, says Nick Setyan. He’s a Senior Equity Analyst at Wedbush Securities.

Restaurant stocks are near a bottom

Setyan likes the restaurant stocks down roughly 25% year-to-date because the potential reward, he says, is a lot bigger than the associated risk. Speaking with CNBC’s Kelly Evans on “The Exchange”, he noted:

These stocks are also attractive for the Wedbush analyst because he’s convinced the food price inflation peaked in June. CPI data for last month is expected on Wednesday.

Stocks he likes in the restaurant space

Names that pop out to him in the restaurant space include Wendy’s and Wingstop. He’s also bullish on Dine Brands Global Inc (NYSE: DIN) that’s trading at a PE multiple of 11.85. Explaining why, Setyan said:

In May, the $1.11 billion company reported better-than-expected profit for its fiscal first quarter. Wall Street currently rates the stock at “overweight” and sees about a 40% upside from here on average.