Time to book a table at The Restaurant?

Partly because summer has finally arrived in the UK but also because it is extremely quiet news wise in the market at the moment. 

However, I would also recommend revisiting The Restaurant Group (RTN) which I have covered in the past after their final results and briefly when they announced a special dividend on the back of a disposal. 

These shares hit my 2% and 20x sell trigger earlier in the year when they surpassed 700 pence, but have since come back by nearly 20%. 

This is in common with other highly rated mid cap stocks which have suffered a bout of profit taking recently. However, nothing has changed here fundamentally and indeed in the most recent AGM announcement they were flagging good LFL's of around 4%, a strong new site opening pipeline and that they expect to report "a very satisfactory first half performance."

On the chart which you can see above they are towards the bottom of their Donchian Channel and Bollinger Bands and entering an area between about 525 pence and 575 pence which offered support in the last year. Finally, the RSI indicator which you can see at the top of the chart is showing some positive divergence (RSI higher / price lower) as the stock has become oversold for a third time - usually a good sign for a turnaround in the price.

The final thing to note is on the dividends which I mentioned in my brief update highlighted above. They are due to go XD the final of 8.75 pence and the 3.45 pence special dividend tomorrow, for a total of 12.2 pence for a yield of about 2% at a 582 pence price this morning. So if you are hungry for income and buy today you should get this and it could help to cover your costs of going in. Or if you are not keen on income or worried your broker may not claim the dividends for you then you may be able to buy tomorrow after they go XD at an even keener price. On balance I think it is a good opportunity to get back into a quality stock which I think will probably revisit 700 pence at some point in the not too distant future which would give a satisfying 20% return. See the Stockopedia Sheet on this one below for financial metrics and if you are not already a subscriber and would like more information on their services then click on this link for more information and a free trial.

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