The Only Stocks Going Up...

It’s conventional contrarian wisdom that the first two things to slide in an economic decline are risk capital and discretionary spending.

One of the metrics I look at in regards to discretionary spending is turnover and wait time for restaurants.

I spent the past week at Bethany Beach in Delaware.

Bethany Beach is a hub for beach vacationers. It’s centrally located for beachgoers from all over the Mid-Atlantic region as well as people coming from New York, New Jersey, and eastern Pennsylvania.

On Monday we tried to get a reservation at our favorite sushi restaurant, Misaki, where the uni is some of the freshest we’ve ever had…

But we couldn’t get a table.

In fact, the hostess told me over the phone we’d need to call at least two days in advance. Hmm.

The community where our beach house is hasn’t gotten the memo on the housing downturn or the “depression.” Housing construction there is going gangbusters.

Almost every day, I see a flatbed truck bringing in pre-constructed lumber for new homes.

This brings me back to the article I wrote on May 30th.

In “Here’s the Next Bull Market: Two Unlikely Stocks Making Record Highs Today,” I put forth the thesis that baby boomers would dominate American markets for the next 20 years.

I wrote the next bull market is in companies like Cracker Barrel Old Country Store (NASDAQ: CBRL) and Bob Evans Farms (NASDAQ: BOBE).

As evidenced by my week in Bethany, American casual restaurants are packed to the gills with customers.

The Bloomberg U.S. Casual-Dining Restaurant Index (BNUSFSRS), which is comprised of 16 companies including Darden Restaurants and Brinker International, has risen 2.7% since April 30…

This compared to a 2.9% decline for the S&P 500.

As Bloomberg reports:

Investors have been drawn to casual dining shares because they’re “fearful” of holding companies that have a lot of business outside the U.S., said Rachael Rothman, a senior analyst in Bala Cynwyd, Pennsylvania, with Susquehanna Financial Group.

Given risks associated with Europe — where Spain, Greece and Italy are among the countries in recession — and China’s slowing growth, investors are “hiding in purely domestic stocks,” including Darden (DRI), Brinker and Cheesecake Factory Inc. (CAKE), that generate “well over 95 percent” of their revenue in America, she estimated.

The perception is that “the U.S. might not be great, but it’s not terrible,” Rothman said.

She maintains a “positive” recommendation on Orlando, Florida-based Darden. The operator of Olive Garden and Red Lobster is scheduled to release fiscal fourth-quarter earnings June 22.

And guess which stock reached a record high yesterday?

In spite of chaos in Greece (and Rome about to follow suit), organic grocer Whole Foods posted a new all-time high of $97.25 and closed up 1.41%.

An organic food bull market in a depression?!

Green guru Jeff Siegel has been covering organic markets since 2004 — specifically Whole Foods, which was trading in the high $30s at the time.

On June 19th, Cantor initiated coverage with a Buy and a target of $104. SunTrust initiated coverage on Whole Foods on June 21st with a Buy and a target of $115.

What’s going on?

Again, it’s the baby boomers.

Baby boomers are not a monolithic market.

They’re spreading their cash among several surprising industries…

They’re spending money in restaurants like Cracker Barrel and Bob Evans. They’re shopping at Whole Foods. And they’re investing in beach communities.

With the general stock market in chaos — and returns on saving accounts and CDs at all-time lows — baby boomers are investing their money on entertainment and vacation homes.

Regards,

Brian Hicks

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Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.