Aggressive portfolio: How Ruby Tuesday plans to grow in a competitive industry

U.S. restaurants are always looking for ways to give themselves an edge in their intensely competitive industry.

Some, like Yum! Brands (a stock we analyze in our Wall Street Stock Forecaster newsletter), are focusing on expanding in fast-growing overseas markets, like India and China. (Yum, whose restaurant chains include KFC, Pizza Hut and Taco Bell, was the first fast-food company to enter China, in 1987).

Other U.S. restaurants have been looking to attract more diners by launching innovative new menu items, renovating restaurants, and improving their service.

Aggressive portfolio: Ruby Tuesday hopes its recent changes will be a hit with diners

One U.S. restaurant stock that is both launching new menu items and renovating some of its outlets is Ruby Tuesday (symbol RT on New York). In light of the company’s recent moves, we updated our buy/sell/hold advice on the stock in the latest issue of Stock Pickers Digest, our newsletter for aggressive portfolio investing.

Ruby Tuesday offers casual American dining. The company owns 742 of its U.S. restaurants; franchisees operate 56 outlets in the U.S. and 57 overseas.

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Like many U.S. restaurants, Ruby Tuesday’s earnings fell during the downturn. To attract more customers and increase sales, the company has been focusing on improving its menu and upgrading its service: Its menu now includes a wide variety of appetizers, handcrafted burgers (including beef, bison, turkey, chicken and crab), a 46-item salad bar, fish, ribs and steaks.

New menu items helped boost sales

In the three months ended March 1, 2011, Ruby Tuesday’s sales rose 3.8%, to $319.1 million from $307.3 million a year earlier, mainly due to new menu items. However, same-restaurant sales fell 1.2%, due to severe winter weather in the eastern U.S., where roughly 90% of the company’s restaurants are located. The bad weather also lowered earnings per share by 14.3%, to $0.24 from $0.28.

Ruby Tuesday aims to convert underperforming restaurants to other casual-dining formats that it sees as better suited to the towns and cities in which they compete. So far, it has converted three of these restaurants; Jim’s ‘N Nick’s Bar-B-Q in Knoxville, Tennessee; Truffles Cafe in Atlanta, Georgia; and seafood restaurant Marlin & Ray’s in Maryville, Tennessee.

Get our updated analysis and clear buy/sell/hold advice on Ruby Tuesday and 19 other aggressive portfolio investments FREE

In the latest Stock Pickers Digest, we take a fresh look at Ruby Tuesday to see if its recent moves are enough to help it fend off the competition and boost its share price.

Best of all, you can get our analysis, which concludes with our clear advice on whether you should buy, hold—or sell—this aggressive portfolio stock, absolutely FREE when you take a 1-month FREE trial to Stock Pickers Digest today.

This issue also includes our full analysis of 19 other stocks that might be appropriate for your aggressive portfolio. Plus you also get 5 in-depth Special Reports and access to our weekly Email/Telephone Hotlines. Don’t wait! Click here to get started right away.