The NCAA basketball tournament -- aka March Madness -- is likely to trigger an orgy of fast food for college hoops fanatics.
Shares of Domino's are up nearly 15% this year – helped by fourth quarter profit growth of 22%. And we are just entering one of company's busiest times of the year.
In 2013 Domino's sold more than 1.7 million pizzas during the NCAA semi-finals and championship games. Many of those orders were online. Domino's says 40% of its total U.S. sales come through digital channels helped by apps for iPhone and Android.
Peter Saleh of Telsey Advisory Group expects even better numbers this NCAA championship season as Domino's continues to take market share from mom and pop pizzerias. That's a good bet, especially since Domino's has a 50%-off pizza deal that goes through Sunday for all pies ordered online.
But Domino's stock isn't cheap. Shares trade at 28 times 2014 earnings estimates. Telsey Advisory's current price target is $82 a share, not too far from where it trades now… good to remember if you're the kind of investor whose eyes are sometimes bigger than your stomach.
Papa John's is even more expensive. The stock, which has also gotten a boost from online orders, is up 17% this year and trades at 31 times 2014 profit forecasts.
If you'd rather go out to get your finger-food fix, nothing says "Big Dance" like spicy chicken wings and beer. And Buffalo Wild Wings has definitely benefitted from America's love affair with sports and comfort food.
The NCAA tournament is typically the second busiest time for the chain, only to be outdone by pro football in the fall.
Brian Vaccaro of Raymond James thinks Buffalo Wild Wings will have a good March Madness run this year, as the company's same-store sales growth has been outpacing the rest of the casual dining industry.
He also note that margins are improving because bulk chicken wings are cheaper thanks to lower corn feed expenses. Wings that cost $2.10 a pound a year ago now go for $1.35 a pound - and all that goes to the bottom line.
Plus, McDonald's (MCD) stopped building up its wings inventory as it tries to figure what to do with its Mighty Wings – a new menu offering that didn't really succeed.
As for the stock, Vaccaro says it's a little pricey. It trades at 31 times 2014 earnings estimates. He thinks that fatter margins will help the stock short-term, but the impact may start to fade going into next year.
So March Madness may not just be about buzzer beaters and bracket-busting upsets by Cinderella teams. It may also refer to the soaring stock prices of Domino's, Papa John's and Buffalo Wild Wings.
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
Are the meals no longer as happy for McDonald's customers as they used to be? The fast food giant definitely seems worried.
McDonald's (MCD) reported lackluster quarterly results last week. And company executives used the words MOREJan 28, 2014 10:46 AM ET
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