The past two years have been a very challenging time for many consumers who have cut back on their spending sharply to deal with the effects of the financial crisis and the brutal recession which has taken place. However, there appears to be a glimmer of hope that this trend may be reversing with consumer confidence for the month of April coming in at 54.9, the highest reading since September, along with the expectations index rising to 72.3, the highest reading since December 2007, when the current recession began. Consumer spending could be on its way up.

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How To Take Advantage
In general, when consumers are more confident about the future they are more likely to increase their spending. One area within which this increase can be seen is restaurant stocks. You can isolate those restaurants that are the strongest in the industry and can benefit the most from this increase by looking at the year-over-year earnings. With the current recession being one of the worst since 1982, those restaurants that have rising year-over-year earnings are demonstrating their ability to survive and thrive in the worst of times. Some restaurants that meet this criterion include:

Chipotle Mexican Grill (NYSE:CMG) this fast food restaurant chain, reported better than expected year-over-year numbers of 78 cents compared to 52 cents for the first quarter of 2008. They also plan on opening 120 to 130 new restaurants this year.

Brinker International (NYSE:EAT), which owns Chili's, On The Border Mexican Grill & Cantina, Maggiano's Little Italy, and Romano's Macaroni Grill, reported earnings of 45 cents compared to 33 cents for the third quarter of 2008. Furthermore, the company announced that it has been aggressively expanding its Chili's franchise with the opening of locations in Toronto, Canada and India. (For further reading, see Core Earnings Measure Up)

Yum Brands (NYSE:YUM), which owns KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W, reported better-than-expected earnings of 48 cents per share compared to 42 cents for the first quarter of 2008. The company also said that they expect 2009 growth to be at 10% or $2.10.

Jack In The Box (Nasdaq:JACK) this fast-food hamburger chain reported better-than-expected earnings of 51 cents compared to 44 cents for the second quarter of 2008. The company also said that it expects 2009 earnings to be within the $2.08 to $2.20 range.

Papa John's
(Nasdaq: PZZA) the dine-in and take-out pizza chain announced earnings of 64 cents compared to 30 cents for the first quarter of 2008. The company also reaffirmed it earning guidance of $1.36 to $1.44 for the year. (For more, see Everything You Need To Know About Earnings)

The Bottom Line
While no one knows what the future will bring, all of the above mentioned stocks are some of the strongest in the industry with all of them reporting rising year-over-year earnings despite the recession and they either are aggressively opening new stores or have confirmed guidance for the rest of the year. If you are hungry for growing stocks, look no further. (To learn more, see Sinking Your Teeth Into Restaurant Stocks)

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Tickers in this Article: CMG, EAT, YUM, JACK, PZZA

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