Takeout Stocks to Invest in As Companies Get Earnings Season Upgrades

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Jul. 23 2021, Published 11:46 a.m. ET

If you're going to spend money on early-morning cravings and late-night munchies, you might as well profit off of those same companies. Investing in takeout stocks can get you returns when done right.

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The companies offering takeout are doing well post-earnings, and investors might want to get in on the action.

Domino's is seeing major investor interest.

Despite a drop in share price since the market open on July 23, the growth for Domino's Pizza Inc. (NYSE:DPZ) stock has been impressive. After beating expectations for second-quarter earnings this week, the shares jumped 14.55 percent. That's on top of the 39.19 percent growth YTD, which led to a nearly all-time high share price worth $524.06.

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Domino's beat the earnings expectations by 6.37 percent, and it also beat the revenue expectations by 6.22 percent. Its $983.7 million quarterly revenue is a big improvement from the previous quarter.

Chipotle is in on the takeout stock action, too.

On July 23, Chipotle Mexican Grill Inc. (NYSE:CMG) is showing similar patterns to Domino's. The shares are down mildly. However, last month's earnings propelled the stock up about 16 percent. Despite volatility, the YTD growth is up 36.46 percent, which led to an all-time high share price of more than $1,800.

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Chipotle beat the earnings expectations by an impressive 14.63 percent, and it beat the revenue by a marginal 0.57 percent. The company's net income is up nearly 3,000 percent YoY. This is even more impressive given the fact that Chipotle had to raise prices by 4 percent to cover recent wage increases.

Don't forget about Starbucks

Meanwhile, Starbucks Corporation (NASDAQ:SBUX) is continuing its upward trajectory as well. The global coffee chain hasn't released its latest quarterly earnings report yet, but that hasn't stopped shares from reaching all-time highs. The shares are up 22.04 percent YTD with the stock trading at $125.74 as of mid-morning on July 23.

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Starbucks is expected to report its earnings on July 23. During the previous quarter, it beat the earnings expectations by 16.61 percent, but missed the mark on revenue predictions by -1.66 percent. Still, it was an improvement on both fronts from 2020. Investors will be looking to Starbucks for guidance on positions as earnings come to a head.

Best time to invest in takeout stocks

Before investing, you might want to wait until the earnings fervor has calmed after such a successful run for takeout stocks. Additional sell-offs could help you time your entry for compounded returns in the long term.

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Deliveroo and Doordash are still risky plays, stay close to the source

Takeout restaurants are doing well despite the COVID-19 pandemic. They're showing profit, which is more than can be said for delivery apps DoorDash and Deliveroo (both of whom have never made a profit).

Shares for Deliveroo (LON:ROO) have recovered after a regulatory hiccup shortly after the company's March IPO. However, there's still risk given the U.K.'s stance on independent contractor rights.

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DoorDash (NYSE:DASH) shares are down 4.45 percent from the company's December IPO.

Ultimately, staying close to the source for takeout and opting out of third-party distributors might be the move for investors looking to make a move on takeout stocks.

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