Toasts and Thoughts: Molson-Coors, Children's Place, Activision
Selling beer is all about two things: marketing and shelf-space.
Hello from New York, where the fact that I've been kissing Molson-Coors' (TAP) bum for months on Fast Money yet don't actually own the stock myself is making me want to drink a six pack or two. TAP is popping higher after the company announced that it will combine U.S. operations with SAB Miller (a UK group) in order to more effectively compete with the Anheuser-Busch's (BUD) of the world. Selling beer is all about two things: marketing and shelf-space. TAP's move helps on both fronts, which is why the stock is working today and, from where I'm sitting, will continue to work. In less boozy news...
- Children's Place (PLCE) has kicked off this month's SSS result parade much the way Charlie Brown used to kick the football: it whiffed badly and humiliated itself. The company guided lower for the quarter just passed and promised nothing but more pain ahead. While "Bullish" is way too strong for how I feel about PLCE, the stock does have the qualities of a trade candidate (e.g. big volume wash-out, accepting the reality of the situation, new management).
Beyond PLCE, Same Store Sales are going to be a train-wreck. Warm-weather (just because retailers shouldn't make the excuse doesn't mean I won't for them), a not great consumer and an extra week in August will combine to make the numbers dire. That said, I'd rather look for long trades on Thursday morning than short ideas today.
- I appreciate the props from Prof. Krueger this morning on Activision (ATVI). Much as I enjoy disagreement by instinctive temperament, and keeping in mind that I'm actually talking my book, I have to agree on ATVI. All I can add regarding Nintendo (NTDOY) is that the conventional wisdom remains that "Nintendo controls most of the software on their platforms". This thinking is based on Nintendo's control of the Zelda and Mario Bros. franchises two Console Cycles ago.
The assumption that Nintendo won't welcome and require third-party software to support the Wii is simply wrong. The gaming pie is much bigger this time around; meaning ATVI's estimates are going higher. The stock looks pretty extended here but, as I've said before, it's a long-term play for me and I'm sticking with it.
- Seems to me that everyone is trying to infer the next Fed Move based on what the Fed did under Greenspan. As in "The Fed is in an easing cycle and those always last for months" etc. Pay attention, Minyans. If the Fed's actions this year have taught us anything it's that Bernanke is playing by his own rules. To paraphrase McCartney, "Listen to what the man says.
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