Starbucks Corporation (SBUX), McDonald’s Corporation (MCD), and Yum! Brands (YUM) are the “most congested longs” in the restaurant sector, according to the Swiss bank’s analysts, while Wendy’s Corporation (WEN) and The Cheesecake Factory (CAKE) are the most popular shorts.
A stronger predictor of future performance, according to the quant team of the bank, is whether or not an already crowded stock has become more crowded over the past three months, resulting in a two-factor crowding momentum score.
In a restaurant investor sentiment report, UBS praised Domino’s Pizza (NYSE: DPZ).
Domino’s (DPZ), Jack in the Box (JACK), Portillo’s (PTLO), Papa John’s (PZZA), and Wingstop (WING), according to the team, scored the highest in this analysis. Under the two-factor method, Wendy’s (WEN) and Cracker Barrel (CBRL) received the lowest scores.
The team wrote, “Conversations suggest DPZ sentiment has improved over the past month, consistent with crowding scores, likely due to some anticipated improvement in recent sales checks/trends, the possibility of an eventual 3P delivery partnership announcement, lowered expectations, and an investor event later in the year.”
“However, the magnitude of positive DPZ congestion relative to select counterparts surprises us. We like DPZ, which has optimistic analysis signals… DPZ is the only stock that we recommend buying based on congestion data.
Aside from this, Potbelly (PBPB) and Dine Brands (DIN) were said to be gaining traction. Dutch Brothers (BROS), Krispy Kreme (DNUT), Kira Sushi (KRUS), and Sweetgreen (SG) received a negative momentum rating with low congestion scores, as the quantitative team has warned of negative momentum over the past few months.
