With more people now heading back to eateries for their favorite foods, restaurants that serve tacos are witnessing heightened patronage this year. So, we think fundamentally strong stocks in this space, Yum! Brands (NYSE:YUM) and El Pollo Loco (LOCO) are worth betting on now. Conversely, Chipotle Mexican Grill (NYSE:CMG) and Fiesta (NASDAQ:FRGI) don’t look well-positioned to capitalize on the industry tailwinds. And we think these companies’ bleak financials make their stocks best avoided now. Read on.Tacos are often considered a go-to food for every occasion that can be enjoyed anywhere because it is easy to carry, easy to eat, and quite suitable for dining-out. Fast-casual food operators and restaurants offer a wide range of customized tacos that are acceptable to even fussy eaters. Furthermore, their healthier and less costly features have powered tacos toward being the dominant appetizer everywhere.
Both online and brick-and-mortar food operators are experiencing high pent-up demand for tacos. As such, quality stocks in this space Yum! Brands, Inc. (YUM) and El Pollo Loco Holdings, Inc. (LOCO) are well-positioned to cash in on the trend.
However, with consumers’ preference shifting towards healthier and homemade food, we think fundamentally weak companies in this space—Chipotle Mexican Grill, Inc. (CMG) and Fiesta Restaurant Group, Inc. (FRGI)—might struggle to stay afloat.