As I suspected, the markets opened higher and held onto most of those early gains by the close of trading on Tuesday. While there is a smattering of earnings this week, including one today for one of our LakeView Asset Management holdings – Constellation Brands (STZ) – for the most part, earnings season does not get moving until next week. Until then, the markets will likely meander or trade on light volume.
There were a few observations that I had with regard to specialty food stores in Beverley Hills where I had a quick visit (I plan to return to the Los Angeles area for a more intensive trip later in the year) the past two days. There appears to be more cake and cupcake stores per capita or per square mile than we have on the East Coast. This is in contradiction to the relative waist sizes of people in Beverley Hills versus that of the New York metropolitan area.
Interestingly enough, last night I drove past a Chipotle Mexican Grill (CMG) in Barstow, CA on my way back to Nevada. The restaurant was empty. However, a nearby Del Taco, Mexican themed restaurant had a waiting line to order. Perhaps it is a function of the Barstow economy. Maybe it is indicative of some of the shine coming off the jalapeño for CMG. Perhaps it is a bit of each. I expect CMG to be a disappointing stock in 2014 and likely generate very low to negative returns. I missed what is claimed to be the world’s largest McDonald’s (MCD) in Barstow but later found out that it is only one of the world’s largest units in the chain.
Hungry yet? You might as well plan a four course lunch today because I am expecting the market to be quiet today and likely flip / flop between gains and losses.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long MCD and STZ — although positions can change at any time.
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Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. A subscription is included with a paid Platinum Membership to Wall Street All-Stars or an individual subscription to the newsletter which can be ordered at www.restaurantstox.com
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