Stocks of restaurants, financial services, retailers bounce back

ByABC News
May 25, 2009, 9:36 PM

— -- It's probably too early to pronounce the bear market dead, but a number of stocks seem to have survived their own near-death experiences.

Nearly 50 stocks have had brushes with a deep correction and lived to tell the story. Those 46 stocks have tripled or more from their 52-week lows and now have stock prices of at least $10 a share, according to a USA TODAY analysis of the stocks in the Standard & Poor's 1500 using data from Capital IQ.

These bounce-back wonders fall into different industries, but they all fit into the common theme of being at the epicenter of worries about the housing crash and slowdown in consumer spending.

"Many of the stocks that were beaten down deserve to rally," says Robert Maltbie of Singular Research. "I'm pulling for this to be real."

Restaurants focusing on cost control

It turns out consumers aren't quite ready to trade dining out for TV dinners. While top restaurant stocks as a group lost half their value in February from their 52-week highs, investors are starting to scoop them back onto their plates.

Much of the rebound in the restaurant stocks' value is a function of them being overly punished, says Brad Ludington, analyst at KeyBank. Restaurant stocks were "priced as if they were going out of business," he says.

The operating environment for restaurants is still difficult. Even so, Ludington says, restaurants' earnings may be better than expected as the companies trim costs and cut back on opening new locations. Many restaurants are using the money they're not spending on new sites to pay down their debt.

Consumer-facing companies, such as retailers