Our time, our schedule has been disrupted -- and we simply aren't doing what we used to do anymore. The problem is that our habits are changing so fast that businesses can't keep up. And these radical reorganizations of what we do and where we go are playing havoc with the stocks we focus on -- regardless of who is president and what this particular president has to say this very evening.
Usually, it's not all that stark. We can't spot it because we have so many data points and are examining so much information.
What does a pizza delivery place have to do with a mass market merchandiser? Everything.
This morning, Domino's -- long one of our absolute favorite stocks, from as low as $10 -- reported a fantastic number: an increase of 12% in same store sales, when we were looking for 10%. It's stock vaulted up 4% to $190. What a run.
Target, on the other hand, announced terrible numbers and gave a hugely downbeat forecast, far worse than expected, and saw its stock pole-down 12% the worst day in 18 years.
These two situations are perfect metaphors for the moment. Domino's, which I have always thought to be a technology company that delivers pizzas, is an extraordinary company because you can use every device, including your Apple watch or your Facebook page, to order right to your home. You don't have to leave the couch. They make it so easy, you don't need cash when the driver gets there. You can prepay.
My kids and I eat Domino's Pizza almost every time we get together. They are vegetarian, and Domino's put in a special no cheese button -- CEO Patty Doyle said he did it for me, I'll take it. They don't like speaking on the phone and they don't like wasting their time and they don't like dealing with cash, so Domino's is perfect. It's the logical iteration of the stay-at-home economy.
Target? It's everything they aren't. First of all, you have to leave the house to go to the store. What an atrocious thing. Second, its prices aren't anything special, certainly not less than what you can get at Amazon (AMZN) , which will deliver it right to you free of charge, if you are on Amazon prime. Third, there is almost nothing proprietary about Target, save a couple of signature clothing lines -- not enough to do the job.
While at one time it was fun to go to, now it is simply a drag, nothing special, nothing that makes us want to get off the couch. The CEO, Brian Cornell, talked about trying to do all sorts of new stuff, new formats, new merchandise. But the pace of the decline tells me that Cornell simply cannot outrun Amazon, not if it is selling commodity items like toilet paper and paper towels or electronics products.
Go to Target. Tell me what you see that you can't get elsewhere. And if you can, then you go to the website, which is doing quite well, except it keeps you from picking up other items when you are there. You don't grab impulse food or cosmetics or housewares. It just doesn't happen. Oh, and if its prices aren't the cheapest online, then you just go elsewhere. So they can talk all about how they want to do the best omnichannel, or order and pick up, but it doesn't matter and it is a little disconcerting that Cornell is talking about a three-year plan.
Who gets three years? Cornell's already been there for three years. Oh, and needless to say if President Trump decides to go with a Border Adjustment tax, then Target could be totally priced out of this market by other firms with lower costs that can handle the pain and the pass-on to the consumer much better.
I think the question is the entire relevance of Target, particularly if prices go up 20% to 25%, as Cornell told CNBC's Courtney Reagan could occur with a Border Tax. Three year plan? How about a survival plan. There is no long game anymore.
It's not Cornell's fault. He's made mistakes, but the truth is that bricks and mortar's a loser in this new world, unless it caters to the stay-at-home consumer, meaning that it sells goods to make your house better. There's a reason why Home Depot (HD) and TJX (TJX) have rallied since they reported. Home Depot has the best merchandise to make your house worth more. The Homegoods division of TJX is kicking butt, because it has merchandise that makes your house look better. It's apparel division is doing well because TJ can go to a Macy's (M) or a JC Penney (JCP) , which are closing stores, and buy their merchandise for next to nothing and sell it below Amazon at TJ Maxx stores. That's a terrific model.
Now let's understand each other, here. The choices for being at home have never been better. Netflix (NFLX) has radically changed home entertainment. The video games developed by Activision-Blizzard (ATVI) , Electronic Arts (EA) and Take-Two Interactive (TTWO) , when combined with the fabulous high-speed chips of NVIDIA (NVDA) and AMD (AMD) , have produced something more exciting than anyone would have thought possible even a few years ago.
Now you can watch other people play games and, with a press of a button from Twitch TV, a division of Amazon, you can order those games -- of course with a percentage going to Amazon. Talk about still one more reason to never go to Gamestop (GME) .
Everything can be related to the stay-at-home economy. Which consumer packaged goods company is doing the best of all of them? PepsiCo (PEP) , which has Frito Lay and a host of good for you snacks. That's what people eat when they aren't chowing down on their Domino's. They can tell Alexa to order them Wings from Wingstop (WING) . There are dozens of services that will pick up food for you at restaurants and bring it to you. The couch is your home.
So when do people go out? When they experience something that is worth showing to their friends on Facebook (FB) or Instagram or Snap. So they go to Sephora or Ulta Beauty (ULTA) , to look their best so they can take pictures and do fashion shows at theme parks like Six Flags (SIX) , or cruises like the ones Carnival (CCL) offers, or trips that you can book via Priceline (PCLN) and save a ton of money. There's a reason that every one of those companies have stocks that are near their 52-week highs. And, of course, they use their iPhone to take those pictures that they messenger or post. And you wondered how Apple (AAPL) got on the all-time high list.
The stay-at-home economy has upended every aspect of our lives -- and it's only going to get more pointed as the generations in their teens, schooled in all of these rituals, become even more set in their ways. Those who offer three-year plans of the "same old same old" are now fighting the stay-at-home history. Irrelevance breeds extinction.
But the relevant? Those who cater to the stay at homer, like Dominos like Amazon, like Netflix? Your hope is that these stocks go down out of misunderstanding or exogenous events. Because they are the places to be. They are part of the theme that's early and isn't going away. Ask Target. This theme gets stronger every day.