Wingstop (WING) is the IBD Stock of the Day. Shares rebounded bullishly from key support a day after the Super Bowl — effectively a chicken-wing holiday in the U.S. Wingstop stock has formed a new handle buy point a few weeks after a prior breakout failed. Several other restaurant stocks are faring well, including Domino’s Pizza (DPZ), Starbucks (SBUX) and Yum Brands (YUM).
Wingstop Stock Takes Flight
Shares of the chicken-wing chain jumped 3.8% to close at 67.99 in the stock market today, bouncing off their 50-day line in heavy volume. The 50-day line is a key test of investor support. Wingstop stock has a new high handle entry of 72.32.
That new buy point is just above a Jan. 11 breakout attempt, with Wingstop stock hitting 72.22, briefly topping a then-proper entry of 72.10.
Wingstop stock has a strong IBD Composite Rating of 91, out of a best-possible 99. The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is off last month’s highs.
Wingstop stock was added to IBD Swing Trader on Monday.
NFL’s Super Bowl Is Wingstop’s Super Bowl
The National Chicken Council last month predicted that nearly 1.4 billion chicken wings would be consumed over Super Bowl LIII weekend, up 2% from a year ago.
Last year, Wingstop reported a “record Super Bowl performance,” selling more than 14 million wings. That marked a gain vs. previous years, management said. This year, however, Super Bowl viewership hit a 10-year low amid a low-scoring game.
Wingstop stock surged 85% last year. But with that ascent has come concerns that the valuation might be a little too high. Morgan Stanley in October downgraded the stock “purely on valuation.” But the firm said fundamentals — namely its same-store sales and plans to open more stores — were still strong.
Those trends appeared to continue through Q4. Wingstop on Jan. 14 reported a preliminary fourth-quarter same-store sales gain of 6% in the U.S. The figure topped the already-high consensus estimates for a 4.9% gain. But the stock fell despite the results, wiping out a breakout attempt.
While other fast-food chains try to out-discount one another, Cowen analysts last year said Wingstop has been “well insulated” from such discounts. The company also has expanded its digital-ordering and delivery businesses, aided by a partnership with DoorDash. Wingstop is estimated to boost national TV ad spending by 50% this year, according to Cowen.
Several other restaurant stocks are at or near buy points. Yum Brands — parent of Taco Bell, KFC and Pizza Hut — nudged into a buy zone in light volume Monday
Domino’s stock and Starbucks stock are both on IBD Leaderboard. Domino’s stock has a 285.01 handle buy point in a double-bottom base. Starbucks stock has pulled back slightly after trying to clear a base-on-base buy point of 69.08 late last week.
Chipotle Mexican Grill (CMG) is slightly extended from a double-bottom base. Chipotle stock is consolidating right at its old highs.
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View more information: https://www.investors.com/research/ibd-stock-of-the-day/wingstop-stock-super-bowl-chicken-wings/