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Buy These Fast-Food Stocks Now: Analyst

Wednesday, 8 Sep 2010 | 11:37 AM ET

Fast-food stocks such as McDonald’s and Yum Brands are trading at all-time highs, so should investors get bullish on the sector? David Palmer, senior restaurant analyst at UBS, discussed his outlook.

Fast Food Stocks Fly High
Some fast food stocks are trading near all-time highs, with David Palmer, sr. restaurant analyst at UBS.

“Both are pretty equal in terms of the upside and both these stocks co-exist nicely in a portfolio,” Palmer told CNBC.

Palmer has “buy” recommendations on both McDonald’s and Yum Brands , with $83 and $49 price targets on the companies, respectively.

“They’re certainly spending up on innovation and they’re spending up on advertising and they’re pushing hard on day-parts that are actually growing, like breakfast, snack and they’ve launched a whole beverage initiative,” Palmer said of McDonald’s.

“These guys have played offense right through the downturn and seem to be accelerating as things start to recover.”

Palmer also said Yum has great exposure to Asia.

“This is a company that by the end of this year will be getting almost 40 percent of its profit from China alone, and has some exciting new markets…in places like India.”

Scorecard—What He Said:

  • Palmer's Previous Appearance on CNBC (Jul. 13, 2010)

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More on the Business of Food:

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CNBC Data Pages:

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CNBC Slideshows:

  • McDonald’s Flashback: Pics from Back in the Day

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MCD & YUM Compete With:

Burger King

Wendy's/Arby's Group

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Disclosures:

Palmer does not own shares of McDonald’s.

McDonald’s is/within the past 12 months has been a UBS client and non-investment banking securities-related services and being/have been provided. UBS received compensation from co.

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Disclaimer

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