These Restaurant Stocks Could Benefit From Their U.S. Focus Post-Brexit

Analysts at Baird issued a report on Monday where they shared their thoughts regarding the implications of the Brexit for the restaurants industry.

As per the research note, the experts believe their thesis on the group was not impacted by the U.K.’s departure from the EU, as most of the companies they cover have little to no direct exposure to European markets, except for McDonald's Corporation MCD, and to a lesser extent Yum! Brands, Inc. YUM and Starbucks Corporation SBUX.

In fact, the analysts continued, it is probable that for the short term, sentiment toward U.S. restaurants ameliorates on a relative basis, as investors are likely to favor U.S.-focused businesses as overseas markets remain volatile.

Related Link: Chipotle Launches "Chiptopia" Loyalty Rewards Program

Having said this, however, they pointed out one, key new risk: Volatility and uncertainty related to the Brexit could results in a pullback in U.S. consumer spending in months to come.

In conclusion, what Baird is recommending is a “selective buying approach.” The firm maintains Outperform ratings on:

• Wingstop Inc WING
• Starbucks
• Panera Bread Co PNRA
• Zoe's Kitchen Inc ZOES
• Potbelly Corp PBPB

These names were selected due to their earnings potential, based on a “top-line driven model,” according to the analysts.

The following were selected for their potential to retrieve a positive inflection in fundamentals over the next few quarters:

• Jack in the Box Inc. JACK
• Habit Restaurants Inc HABT
• Buffalo Wild Wings BWLD

Finally, Wingstop and Dunkin Brands Group Inc DNKN were also selected, as they offer defensive business models and an attractive risk/reward profile.

Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.