Christmas certainly came early this year, but where would I look for more presents in the season of giving?
Consumers, not corporations run the economy. We collectively are responsible for 70% of our economy, so when we are more confident, when sentiment is positive, it is reflected in stock prices.
In 2017 I see several catalysts for higher consumer confidence: 1) Lower taxes 2) Redo or Replace Obamacare, both of which will put more change in consumer's pockets. Where will they spend that?
I like COST (Costco) to continue to benefit from the happier consumer. Look at how many retailers peaked as they traditionally do, at or about Black Friday (BF) and then look at COST. It has held its gains, and is up 7% since BF, while TGT is down 6% and M is down 18%.
I also like HD (Home Depot) for several reasons: 1) Tax cuts will be spent here to make houses nicer to live in or sell 2) Many of the goods they buy are from overseas, so the strong dollar means they can buy at cheaper prices, 3) With 371,000 employees, a fix to ACA will save the company a fortune and hopefully its employees will have more in their pockets too, some of which gets spent at HD.
Middle to high end dining kingpin Dardens (DRI) parent company of Olive Garden, LongHorn Steakhouse, Red Lobster & The Capital Grille will benefit.
Popeye's Louisiana Kitchen (PLKI) Change in tax rates benefit smaller companies even more than big ones, as they usually pay higher tax rates. 80% of their biz is in the US, so more confident consumers may move up the frequency of their trips to Popeyes.
CROP & ANIMAL NUTRIENTS
More Dining out means more food production and more food production means fertilizer and animal nutrient companies like MOS (Mosaic) and AGU (Agrium) will benefit.
Obamacare has been a near death experience for health insurers. United Health (UNH) has already virtually abandoned the state insurance marketplaces, and shares have pushed to new highs since.
Jon Najarian @jonnajarian
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Talent hits a target no one else can hit; Genius hits a target no one else can see.