Prediction: This Well-Known Brand Stock Will Be the Best Performer the Rest of 2024

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24/7 Wall St. Insights

• With a notable market rotation happening, where should nervous investors seek opportunities now?
• Among stocks of well-known companies, Wall Street has high expectations for Dave & Buster's Entertainment Inc. ( NASDAQ: PLAY ).
• Also: Discover 2 dividend legends to hold forever .

Warren Buffett, perhaps the most well-regarded investor of all time, famously prefers to invest in companies that are well-known and that have easy-to-understand businesses. That's why Berkshire Hathaway's top holdings include such household names as American Express Co. ( NYSE: AXP ), Coca-Cola Co. ( NYSE: KO ), and Chevron Corp. ( NYSE: CVX ). The attraction of companies likely to fare better in recessions, and stocks that can weather market downturns better than more speculative plays, is clear in times of economic uncertainty.

With a notable market rotation happening, where should nervous investors be seeking opportunities now? Let's take a look at well-known brand stocks for which Wall Street analysts have big expectations for the rest of the year and into the next.

Clearly, Wall Street feels Dave & Buster's has the greatest potential upside of these household name stocks in the coming year. Does that mean that its shares are undervalued? Or perhaps one overzealous analyst has skewed the mean?

Why Invest in Dave & Buster's?

Are Dave & Buster's shares poised for a turnaround?

Dave & Buster's stock is up about 62% from its 2014 initial public offering (IPO) share price. Shares were last seen trading shy of $32 apiece. They hit an all-time high above $73 back in 2017.

The company calls itself the “ultimate, innovative, experiential eatertainment destination!” Each location has a full-service restaurant, full bar, and a video arcade that is known as the "Million Dollar Midway." Like many businesses in its industry, the company struggled through the COVID-19 pandemic, but it went on to acquire a rival chain in 2022 and last year began revamping its locations to focus on new types of interactive social gaming and group entertainment options, as well as to update the bar experience.

The company has not offered a dividend since before the pandemic. The stock far outperformed the S&P 500 in 2023. Shares reached a post-pandemic high near $70 apiece back in March but have pulled back since then. The question is whether the shares are poised for a rebound. Let's have a look at what Wall Street expects.

Dave & Buster's, the Company

This company owns and operates entertainment and dining venues for adults and families in North America. Its venues offer a menu of entrées and appetizers, as well as a selection of alcoholic and non-alcoholic beverages. And they offer an assortment of entertainment attractions centered on playing games and watching live sports and other televised events. The company operates its venues under the Dave & Buster's and Main Event brand names.

Dave & Buster's is based in Coppell, Texas, a suburb of Dallas. The company was founded in 1982. In October of 2014, it went public. The company competes with or is similar to Bowlero Corp. ( NYSE: BOWL ), Chuck E. Cheese, Pinstripes Holdings Inc. (NYSE: PNST), Six Flags Entertainment Corp. ( NYSE: FUN ), and TopGolf.

Earlier this summer, the company blamed disappointing fiscal first-quarter results on soft consumer demand. The fourth-quarter results were also short of expectations. In April, it appointed a new chief financial officer and it updated its menu .

Dave & Buster's, the Stock

Dave & Buster's

The share price is about 41% lower than at the beginning of the year. In that time, the S&P 500 is up nearly 18%. Note that the $61.71 consensus price target is less than the 52-week high. The consensus recommendation of analysts has been to buy shares for at least four months. Truist Securities recently maintained its Buy rating, though it did lower its price target to $59.

The stock is popular with institutional investors. BlackRock, Hill Path Capital, and Vanguard are beneficial owners. Almost 39 million shares, or over 9% of the float, are held short. Note that the new CFO bought more than $526,00 worth of shares in July.

Wall Street expectations for where the stock goes in the next 52 weeks vary widely but are all very positive. Even the lowest target signals that the share price has plenty of room to run in the next 52 weeks.

Despite Wall Street's apparent optimism, it is hard to argue that current economic conditions favor Dave & Buster's. It could have trouble attracting and retaining customers in the short term, and rising labor costs and supply-chain shortages may also be a drag. The remodeling program could help offset these headwinds, but its pace has been slow thus far.

Wall Street does not seem too concerned, though, and remains optimistic so far.

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