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November 22, 2011
Restaurant Industry Stock Review – Nov. 2011
The U.S. economy is improving, albeit at a lower rate, but a sluggish labor market, over-supply of restaurants in the industry, higher gasoline prices, food cost inflation, a still-elevated unemployment level and weak income growth may weigh on industry profitability.
These factors may weigh on industry profitability? How can we know for sure!
That got me to thinking. What actually would hurt industry profitability? Here's a list I just thought up.
1. A slowing economy
2. A sluggish labor market (with high unemployment)
3. A restaurant glut
4. Higher gasoline prices
5. Food cost inflation
6. Weak income growth
The list just sort of popped into my head. There's no explaining the vision that came to me with crystal clarity. I didn't even hold a séance.
I only wish there was a way to match up my list with the Zacks Equity Research's list of current economic conditions which may (or may not) affect industry profitability. Only then could I know if my money was safe parked in a heavily weighted restaurant stock portfolio. Lacking that, I'm not about to do something impulsive based on seemingly well-grounded common sense conjecture though. You know why that is too. It's not like I really need to tell you.
Restaurant stocks for the long run! Double the profits or bust!
Séance
Scientific skeptics and atheists generally consider both religious and secular séances to be scams, or at least a form of pious fraud, citing a lack of empirical evidence.
Nonsense! If there is one thing I know for sure, it is that there has been no fraud in America for at least as long as I have been alive.
The subprime mortgage fiasco played out exactly as nature intended. Money was loaned to people with "no income, no job and no assets" and then we the taxpayers bailed out the banks to support the excessive bonus structure of well-compensated high-level financial executives. See? No fraud. That's just good old fashioned American business.
ICE: Mortgage Delinquency Rate Increased Year-over-year in October
-
From ICE: ICE First Look at Mortgage Performance: Serious delinquencies hit
17-month high while foreclosure activity remains historically muted
• At 3.45% ...
2 hours ago
10 comments:
4 Reasons to Love Restaurant Stocks
The National Restaurant News index, a measurement of more than 50 restaurant stocks, has risen 130% over the last 10 years, while the S&P 500 is up just 4%.
Buy high, sell higher? Hey, it worked in real estate until it didn't.
We'll always need food, and though restaurants may be a luxury to some, it's one of the first places our discretionary income goes.
We'll always need homes too. How did that work out? Further, words cannot express how bearish I am on discretionary income in the distant future. Perhaps it has something to do with today's 1.94% yield on 10-year Treasuries.
The biggest trend in retail these days is the shift online.
So if I shop at home instead of leaving the house (presumably at least in part because gasoline prices are high), then how do I actually end up at a restaurant?
It's a leap, but my guess is that more retail space will be occupied by service businesses, restaurants being a common example.
How did that optimistic theory work out in Detroit when manufacturing dried up? Were all those empty buildings put to good use?
If you've picked up a paper or turned on the TV in the last 10 years, you know the real growth in the world is coming from China and other parts of the developing world.
I am so bearish on those savvy Chinese and have been since late 2007.
China Shanghai Composite Index - 5 year Chart
"I didn't even hold a séance." I did: I consulted Lord Keynes. "Tell me, Maynard" I said "how do you recommend we proceed?"
The great man paused and then carefully enunciated "I wouldn't start from here."
remember how the bicentennial was a pretty cool national party, even during the stressed 70s?
2026 will be the 250th, another significant milestone.
The baby boom was aged 15 to 30 in 1976, you can do the math on 2026.
If we can either somehow expand the oil supply such that it's under $2 again (or find a cost-effective alternative), and if we can reform health care to reverse 30 years of cost inflation, and if we can close the $500B/yr trade deficit, mebbe we'll make it to 2026.
As it stands now, I'm not entirely sure we're going to get there.
Well, let's see, we are advised not to start from here, if we wish to get there, and there is looking very unlikely in any event.
Does Honey have room in her bunker?
Happy Thanksgiving Mark. I want one of those bunkers!
Mark,
add to your list a possible implosion of the Euro and the huge downside for the US. MP over at CR is pounding the table on this, has been for a while and is especially concerned with an interview this am betweeen Oliver Sarkozy, of Carlyle, brother of the French prez and Altman, former Treasury Sec...both see the Euro as entering endgame. I will try to link the
video...http://video.msnbc.msn.com/cnbc/45415160
dearieme,
I've shared this before and I'll no doubt share it again, lol.
This is your captain. I've got good news and bad news.
First the bad news. We're hopelessly lost.
Now the good news. We're making good time!
Troy,
As it stands now, I'm not entirely sure we're going to get there.
If we can get energy prices down to the equivalent of $2 per barrel then just imagine the sheer number of robots that will be created to make our lives that much easier!
fried,
We just need to get onto the road not taken. ;)
GYSC (& all),
Happy Thanksgiving!
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