According to Jefferies, investors looking for one of the biggest bargains on the market are holding back should look no further than casual dining. Rising inflation and recession worries have sent shares of many fast-food stocks down. However, this drop may be over as consumers are showing more resilience than anticipated, according to the company. “We think Casual Dinner represents the best risk/reward, with valuations halved… and our scenario analysis shows the risk to EBITDA is less than scary” , wrote analyst Andy Barish in a note to clients. “Importantly, consumers are demonstrating better resilience and a significantly more favorable capacity backdrop, supporting similar outcomes mainly in times of recession and the opportunity for an ongoing recovery.” continuity in stock returns.” Shares of fast-casual and casual restaurants are down 22% and 38%, respectively, from their 2021 highs, according to Jefferies. As of year-end, companies have struggled with higher food and labor costs eating into profit margins, although many chains have responded by raising prices for consumers. While the outlook looks troubled, the downside to sales and profits won’t come close to what was seen during the Great Recession, according to Jefferies. Consumer spending, on the other hand, persists, and some believe that will likely continue in the near-term, including Bank of America CEO Brian Moynihan. “What’s going to slow them down? Nothing right now,” he told Bloomberg Television during an appearance from Davos, Switzerland this week. Moynihan said consumers are in good shape, and bank customers have spent 10 percent more this month than they did last year. Restaurant bets Among the top picks for playing the casual dining market, Jefferies has named the restaurant and entertainment chain Dave & Buster’s. In April, the company called the stock one of a number of consumer discretionary names that could benefit even during a prolonged slowdown. The company is “well-positioned to capitalize on latent consumer demand for services/experiences, and is the most insulated of the company-owned models from the inflationary headwinds caused by the economy.” entertainment/gaming business,” Barish wrote in an April note. Shares of Dave and Buster’s are down nearly 13% this year, but the stock could nearly double its closing price on Tuesday. , based on Jefferies’ 12-month price target of $60. The Cheesecake Factory, whose stock has fallen about 21% this year, also caused Jefferies to cut. In a baseline scenario that suggests a rebound in 2025, Jefferies forecasts an 88% increase in stock prices. In the short-term, the stock could rally nearly 79% based on the company’s $50 price target at Tuesday’s closing price. Outback Steakhouse owner Bloomin’ Brands and First Watch Restaurant Group are also on the Jefferies list. These stocks are down about 10% and nearly 13% this year, respectively.