While restaurant stocks have shown signs of weakness, the fundamentals are more stable than the media or markets would have investors believe, says Credit Suisse Analyst Keith Siegner. He points to potential growth stories, despite the volatility in the U.S. consumer outlook.

“We believe investors should be focusing on large consumer multinationals with strong brands, high returns and free cash flows, international growth opportunities and the wherewithal to invest in comps in the U.S.,” said Siegner, adding that having the size and scale to pursue market share is imperative in the current economic environment.

Yum! Brands (YUM) and Starbucks (SBUX) are among Siegner’s favorite names — Yum! for its long-term growth potential and ability to tap into China’s emerging consumer class, and Starbucks for its investment in comps and international margin improvements.

Siegner places emphasis on international growth stories, seen in companies like McDonald’s (MCD) and Yum!.

“For Yum!, the YRI business, getting to be potentially a $1.25 billion business by 2015 from under $500 million now, is a huge opportunity,” Siegner said. “McDonald’s is very clearly targeting [Burger King (BKC)] as a share donor in Germany, Burger King’s largest European market.”

This entry was posted on Wednesday, July 28th, 2010 at 12:01 pm and is filed under General Investing. You can follow any responses to this entry through the RSS 2.0 feed.