Fixing Starbucks and Praising Best Buy
Don't fight the best in breed of a hot sector, whatever you think of the consumer as a whole.
Hello from New York where President Bush speaking semi-extemporaneously about the economy hasn't exactly lessened my desire to call it a year and head out the door until January 2. No political statements here (at least from me). I voted for the guy twice and, given the alternatives at the time, I'd do it again. I'm just saying, if you're looking for a solution to year-end apathy, a presidential press conference isn't it. Here's what I'm watching to take my mind off the pain:
- Mrs. Jeffmacke and I did some Christmas shopping over the weekend. I was impressed with the traffic and business flow at: Best Buy (BBY), who is in the sweet-spot of a bitter sweet Holiday season; LVMH's Sephora, who sold Mrs. JM a whole bunch of make-up she really doesn't need and Saks (SKS).
- Among the misses was Starbucks (SBUX): I've been on the "Long McDonald's (MCD), sell Stabucks" trade for most of this year, if not longer. With SBUX off over 40% YTD and the analysts starting to pile on the coffee kingpin, I'd really like to get bullish SBUX here, if only because it seems like a sort of cocky thing to do. But after visiting a filth-hole SBUX and waiting 20 minutes while they lost our order I can't help but think things are still going to worse before they improve. What would I do to fix Starbucks? I'd rip the menu in half and I'd dump the music. Don't be fooled by crowded stores, Minyans. "Lines out the door" is only a good thing if the customers are being served quickly. Otherwise it's just the DMV.
- Two of the consumer names I'd love to own are private. Toys 'R' Us and Dunkin Donuts. The former has done a complete 180 from its days of plummeting towards zero as the "K-mart of Toys" in the late 90's. The latter is everything SBUX and Krispy Kreme (KKD) should be.
- As is, I the only long trade I'd consider on the consumer right now is a Best Buy options probe into earnings tomorrow. I'm not trying it and I think my "I've sold incremental longs and am done for the year" stance is well documented. I'm just saying, as I did on Friday's Fast Money, a lot of people are shooting against Best Buy even as just about everyone who sells products at BBY (Corning (GLW), HP (HPQ), the video game guys) is saying business is great. Don't fight the best in breed of a hot sector, whatever you think of the consumer as a whole.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter