Top Fast-Food Stocks for 2014

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It's safe to say that 2013 wasn't a good year for eateries specializing in fast food. Consumers traded up to fast casual, where patrons can get better quality food but with equal speed and convenience for just a bit more money.

The trend may not reverse itself in 2014, but there's plenty of room for some chains to deliver market-thumping gains for investors. Let's look at three companies to watch this coming year.

The poster child of fast food has proved mortal in 2013. After its decade-long streak of positive monthly comps came to an end in October 2012, we've seen ups and downs at McDonald's this year. The end result was a lackluster year, with McDonald's on pace to grow its revenue by a mere 2% for 2013. 

Business should improve in 2014. McDonald's is installing deeper prep tables at all of its stateside locations, giving it room to expand the number of fresh ingredients it has available. This will give Mickey D's the flexibility to innovate its menu until it reconnects with customers.

Jack in the Box
Unlike most fast-food chains that lack a fast-casual play, Jack in the Box owns burrito roller Qdoba. Both of its concepts have been struggling lately, though. Comps were negative in the latest quarter, and the company moved to close 67 of its Qdoba locations this summer.

Sales have been ho-hum, but Jack in the Box is holding up better on the bottom line. Analysts see earnings per share soaring 26% in this new fiscal year that ends in September and by another 15% in fiscal 2015. 

Yum! Brands
Moving away from burgers, Yum! Brands is the parent company of Taco Bell, KFC, and Pizza Hut. Yum! became a thinking investor's darling a couple of years ago as a way to play China's explosive growth, given the booming popularity of KFC in the world's most populous nation, but there have been hiccups on that front this year.

Things should get better for Yum! in 2014. China poses a strong turnaround opportunity, and Yum! still has three market leaders in distinctive fields of Mexican, fried chicken, and pizza. Revenue and earnings declined in 2013, but the company should more than make the difference back in 2014.

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Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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