Business spending is picking up as the economy recovers. Airlines, hotels and restaurants are all seeing a pick-up in spending.

 

Where do business people like to spend most? (5 credit card stocks to get boost from spending)

 

One of the most popular places during the peak of the bull market was the upscale steakhouse. That popularity translated to explosive growth and lots of competition.

 

In the early stages of the last business cycle it did not seem to matter how many steakhouses opened in a particular city. They were all packed and steakhouse franchises like Morton's (MRT) and Ruth's Chris (RUTH) did tremendous business.

 

Their stocks did quite well too, but that ride ended with over expansion that run head first into a crippling recession.

 

With budgets strapped consumers, including the all important business customer, all pulled back on spending. As a result stocks like MRT and RUTH plummeted.

 

Those tough times are easing and both MRT and RUTH have rallied nicely, but still trade well off previous highs.

 

Last week Morton's announced expectations for the first quarter and full year 2010 that were better than analysts were expecting. The company says it will earn a profit of $.25 to $.30 per share for the 2010 fiscal year.

 

Analysts were expecting that number to be $.22.

 

At the current price of $5.48 per share MRT trades for 18 times the high end of the company’s guidance. With growth for this year and next expected to be above that multiple shares of MRT can be expected to continue their ascent.

 

It is interesting to note that one of the hottest stocks this year is Rick's Cabaret (RICK). Shares of this adult entertainment company are up 66% this year on the strength of higher business spending.

 

Could the steakhouse stocks be the next big movers?

 

If you haven’t visited a local steakhouse in recent weeks, I would suggest doing so for some hands on research. I think you will be pleasantly surprised with the traffic that you see.

 

I would be a buyer of Morton’s. (I like these Top Stocks as well)

 

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