Several different food-related exchange traded funds (ETFs) are available that dabble in restaurant stocks. The largest is the Invesco Leisure and Entertainment ETF (NYSEARCA:PEJ), with net assets of $298 million. However, only four out of its 31 holdings are pure-play restaurant stocks. 

An industry-specific ETF to select for restaurant stocks would be the AdvisorShares Restaurant ETF (NYSEARCA:EATZ). With an appropriately designated stock symbol, EATZ is actively managed and is entirely made up of restaurant chains, except for a couple of food distributors. However, it has less than $3 million in net assets, so I wouldn’t recommend you buy it.

PEJ and EATZ are up 10% and 6% year-to-date (YTD), with EATZ gaining more than 28% in the past six months, a sign restaurant stocks are on the mend. With this in mind, here are three restaurant stocks that analysts love right now. 

Yum China Holdings (YUMC)

Yum China Holdings (NYSE:YUMC) is the largest of the three restaurant stocks on this list, with a market capitalization of $15.5 billion. Of the 33 analysts covering its stock, 22 rate it a “buy,” with a median target price of $55.07, 43% higher than where it’s currently trading.

YUMC is China’s operator of KFC and Pizza Hut. But unfortunately, the Chinese population hasn’t been dining out as often due to higher inflation in 2023 and a sputtering domestic economy. This has severely reduced Yum China’s same-store sales growth. 

As a result, YUMC shares are down nearly 40% over the past year. YUMC stock trades at one of the lowest points since Yum Brands (NYSE:YUM) spun it off in November 2016. As recently as March 2023, it traded well over $60. 

The company reported strong 2023 results in February, including a 21% increase in system-wide sales, 7% same-store sales growth, opening nearly 1,700 new stores and an operating profit of $1.1 billion, 79% higher than a year earlier.  

Due to the strong year, it plans to buy back $1.25 billion of its stock in 2024 and increase its quarterly dividend to 16 cents. It also plans to open up to 1,700 stores this year to reach 20,000 by the end of 2026. It finished 2023 with 14,644 in over 2,000 cities. 

With a bright future ahead, YUMC is one of the restaurant stocks that has value right now. 

Arcos Dorados (ARCO)

Arcos Dorados (NYSE:ARCO) is the second-largest of the three restaurant stocks, with a market cap of $2.4 billion. All six analysts covering its stock rate it a “buy,” with a median target price of $14.30, 27% higher than where it’s currently trading. 

Just as Yum China focuses on KFC and Pizza Hut restaurants in China, Arcos focuses on McDonald’s (NYSE:MCD) restaurants in Latin America and the Caribbean. 

It is the region’s largest restaurant chain, with 2,361 locations as of Dec. 31, 2023. The company owns 71% of them, and the rest are franchised. Approximately 48% of its locations are in Brazil, with the remainder split between northern and southern Latin America.  

In 2023, it had $4.33 billion in revenue, up 19.6% from 2022. Its net income was $181.3 million, 29.2% higher than a year earlier. It trades at a reasonable 13x its 2023 earnings of 86 cents. McDonald’s trades at 23.3x earnings, almost double.

I recommended ARCO stock in January 2023 at $8.70 a share. It’s up 29% since. It’s still a buy in double digits. 

Portillo’s (PTLO)

Portillo’s (NASDAQ:PTLO) is the smallest of the three restaurant stocks, with a market capital of $967 million. Seven of the 10 analysts covering its stock rate it a “buy,” with a median target price of $21.11, 59% higher than where it’s currently trading. 

All three of the restaurant stocks on this list are down in 2024, with Portillo’s doing the worst, down by 15%. The operator of fast-casual restaurants serving Chicago-style food went public in October 2021 at $20 a share. Its shares currently trade 34% below its initial public offering (IPO) pricing. 

When it went public, it had 67 locations in nine states. Today, 84 are open in 10 states, up from 72 at the end of 2022. In 2023, it opened locations in Arizona, Florida, Illinois and Texas. In 2024, it plans to open at least nine locations.

For its business in 2024, Portillo’s expects 12-15% restaurant unit growth, same-store sales growth in the low single digits revenue growth in the mid-teens and adjusted EBITDA growth in the low teens.

In late March, Jefferies analysts cut Portillo’s price target by $3 to $21. However, it maintained its “buy” rating on the stock, suggesting that the company will continue to be successful with its expansion plans outside the Chicago area. Skeptics have overstated concerns about the restaurant operator’s financials and business, but I think it’s another value buy.

On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.