Tom’s Thoughts on Retail and Restaurant Investments
Transcript:
Katie Nealis: So, Tom, the restrictions are hopefully lifting soon. And I am so excited to get back out there, have a nice date night out at a restaurant and also spend my money shopping. Yeah. So a really great question we have is our restaurants and retail stocks things to invest in right now?
Tom Vaughan: Oh, yeah, that’s a good question. Well, they’re calling these types of companies like clothing retailers, let’s say, for example, or restaurants or hotels or airlines, and they’re calling them Epicenter stocks, that’s kind of a new term. And obviously, what they’re talking about was that they were dramatically impacted by the virus. And so theoretically, as the virus gets under control, because of the vaccine, you know, these companies can reopen. And the really big thing that I think is very exciting is that a lot of these companies had to cut costs in order to survive. I’ll give you an example.
So Chipotle, they just announced their earnings this week. And they match the expectations on revenues, they match the expectations on per store sales. So that was good, the expectations were fairly high, they matched them, but they actually almost doubled the expectations for earnings per share, after all their costs. And that’s exactly what I’m talking about, the AAA probably had to cut back substantially in order to survive. And now the revenue starts to pick back up and the and the earnings really start to grow. And that’s where you make money in the stock is where the earnings are higher than what was expected. Most of the times the stock is already a built in this expectation for earnings. And then when you surprise to the upside, that’s where money can be made. And so yeah, I would say definitely retail, like the gap has done well, so far, you know, Ulta beauty makeup is coming around, you know, because people again, is going to go on date night, you know, might want to do makeup, different makeup than you have now those types of things are going back to work or what have you. I think there’s going to be an explosion and all of those Epicenter stocks. And that includes retail and restaurants. I think those are good areas to take a look at.
And right now as we speak, I mean, actually the market is doing phenomenal today, even in those areas, especially but right now, what’s happening is because of the global situation, the situation India situation in Europe and what have you, with the virus not really being under control, it’s suppressing the gains that we should probably be seeing. And it’s not a bad time to be accumulating those Epicenter stocks, because they’re not flying yet about once this kind of global, you know, reopening happens. And unfortunately, it kind of needs to be global. It’s not just here, it’s not just, you know, the as far as the stock market is concerned, it has a lot to do with our bond yields, which has to do with the global environment. So, but I still think there’s a great opportunity to kind of get in and nibble at those, you know, types of stocks. So yes, I think those are great areas right now. I think they can be great. Normally, I’m not a huge fan, you know, some of those areas, per se but right now I think it’s great.