Spending is in Americans' DNA
We're frugal, but we're not poor. Restaurants and good fast food have strong appeal for consumers now, making those stocks solid buys.
I'm flabbergasted because if consumers are really hurting, if the payroll tax hike mattered, if the delayed tax refunds mattered, and if higher gasoline prices mattered, these upgrades surely don't show it.
On Wednesday, Raymond James said, after a hiatus, that it's time to buy Panera (PNRA). Thursday, Goldman said Panera and Brinker (EAT) -- think Chili's -- should be bought because increasingly optimistic consumers are spending, particularly those in the high-income bracket. The same Goldman research also says Starbucks (SBUX) is more popular than ever and has a better more-likely-to-recommend ratio than any other restaurant chain.
From what you read in the newspapers and on the Internet and what you hear on TV, these recommendations make no sense. How is it possible that we could have any confidence at all, given all of the negative news?
How can people be willing to spend $6 a throw at Panera for a signature panini or that Asian sesame chicken salad, or shell out 10 smackers for a dinner at Chili's or $5 on a triple venti cappuccino with skim, wet?
How come they're not staying home? Isn't that what you do when things are tougher? How come they're not trading down to McDonald's (MCD), which, by the way, has made some solid, more nutritional changes to its menu of late?
Simple. It's because we're a richer country than people realize, particularly when our houses and our stock portfolios go up in value.
Most people spend way too much time obsessing about sending a few dollars more to the taxman. And for the rich people, a return to the old tax rates of the 1990s was supposed to be catastrophic.
In reality, 98% of the people didn't have their income taxes raised. Many of the remaining 2% have seen an rise in their chief asset, their home, which might actually make up for the increased taxes. Everyone, of course, feels better even knowing what his tax rate is, something the fiscal cliff resolution finally gave us.
We spoke to Domino's CEO Patrick Doyle. That company is more of an international company than ever, and business sounds quite strong. That's why the name didn't come off the actual buy list. Chipotle? I wonder if "Food with Integrity" ever goes out of style, and that's what's cool about the Mexican chain.
More important, I think these upgrades are going to look very smart a few months from now because raw costs for everything from gasoline to grains are coming down right now, and all of these companies are incredibly good at productivity and cost control.
This group has been a real underperformer of late. Right now the market wants to embrace those stocks that have underperformed, as opposed to many of the first-quarter winners, which are getting hammered. I think they have once again become go-to places when we get foreign-related sell-offs because these are domestic security growth companies, and that's the stock antidote to the Japanese, European and Chinese central bank irrationality that's playing out now.
And remember: We aren't a poor nation, and we aren't a frugal nation. We remain a nation of spenders. Going out to dinner has always been in our DNA, especially when we're feeling good about ourselves. And that's what happens when our stocks are up and our houses are no longer going down in value.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
More from TheStreet.com
Restaurant traffic is definitely there - lots of places are crowded on the weekends. But if you listen to the insiders, they'll tell you sales of the real moneymakers are down - drinks, appetizers and desserts. Wanna save $12 when you take a family of 4 out to Applebees? Have them all order water - save $2.50/person plus tip.
we have a giant quagmire of a mess happening.
poorly educated kids, "no child left behind" testing up the ying yang instead of old fashion traditonal education.
kids who have parents who grew up baby sat with the video now baby sit their kids with video games.
people who still think making $15 or $20 an hour is a "good paying" job.
the stage is set for some wild future for usa!
i'm still making sure MY butt is covered
Credit card balances are rising again and the only reason they fell over the past couple of years was not people paying them off but going bankrupt and the banks having to write off the bankruptcy card balances.
At almost $15,000 of credit card debt per person that is a lot of $5.01 on a triple venti cappuccino with skim, wet?
Pretty much nothing has changed and the US consumer is still living off credit.
This is not going to end well at all folks.
Expect by the end of this year half the world's trade being done in yuan and by end of next year 100 percent of the world's trade done in yuan and the total collapse of the dollar.
Get ready to ask your illegal immigration friends how to live on no income at all.
FEMA should look into soup lines once again before this coming economic crisis makes it impossible for them to respond.
it's not rocket science to notice the attendance in restaurants has gone back up the past few years. people like to go out to eat. prudent people watch it, not eating out every single day. many only a few times a month at best.
but to turn this into a "BUY" opportunity seems late. or at best a call for BUY when others know something hidden in the background that should mean SELL.
The rise in product for the restaurants, is what has had me perplexed,
Beef, pork,chicken,fish even bread products...
So I figure one of two things...Lower grades of meat are being used or smaller portions ?
For a couple to go out and get 3 entrees for $20 bucks is a fair deal, not including bevs?
Lunch at tops $7, should be enough at many places...
Much above those prices, would just be because of a higher cost of living Regionally.
But by the time you throw in a beverage or so, plus tip...You are at $25 and $10, respectively.
Eating out several times a week, gets damn expensive; And you would need a reason to do so.
Everytime I get ready or think about investing in the eatery business, I pull back and have second thoughts....It's been fickle the last few years, ups and downs for too many reasons, and then dealing with what has been labeled "the Great Recession."
Mickey D's has actually faired pretty through all of it....I guess because of people downgrading??
Yum's was doing fine ,then they have food problems in China..
Starbucks, outside of penetrating of every corner in America...It's troubling with all the competition.
I guess I'm just too skeptical...And have missed part of the boat ride, because of it.
According to an Article, done by a Research Economist for the Associated Press...
Most indicators are BACK to pre-Recession numbers or the Fall of 2007...
I'm not going to beat this to death, because I end up "spinning my wheels".
There's just too much doom& gloom in some circles...And I refuse to let it bring me down.
Most of the indicators of the Economy are within 1-2%, some even less to previous levels.
Exceptions: Are the "Job Numbers and Housing" they are lagging, but coming back a little better.
There is "no arguement" on that front, and no need to try and explain it off to Obama or anyone else for that matter...We went through a "Great Recession" we all "know that to be a fact."
It does not to be "repeated on a daily basis" it's a given....IMO
The DEBT and some of the other deficits, we shall have to deal with on a long term basis..
That is a given also....No arguement here....What's the use.???
We are un-winding from a deep recession...
And it will take plenty of time....No one could do it much faster, then what's being done..NO ONE.
Ahhhh....Getting back to the restaurant vein....We made arrangements to go out/up to our small Golf Club and have dinner with some old friends, that use to own a Bar, and we traveled with them to Horse races, and Gamblings boats on the Mississippi....We usually got a group together and took someone's motor home....It was a lot of fun in the "good old days."
Now I know I'm not going to have ham salad sandwichs tonight...
And probably will have a strip steak or a top sirloin, cooked on the grill, with a salad bar.
Yes we do have choices occassionally....I consider us fortunate.
We stock a huge freezer all year long and keep an ample pantry, getting low right now on pantry items.
And like I say, we make pretty much anything, except Oriental type meals.
Not much on rice, nor some of the different methods of prep.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.