Do you need to go to Wrestlemania if you can play WWE at home? Do you have to spend all of that money at a pro basketball or football game when you can play NBA 2K or Madden? Is it imperative that you spend $12 a throw at the movies and another $8 for candy or popcorn and a soda when Mafia III or Grand Theft Auto is playing at home and you've paid for it in spades?
That's a huge part of this new economy that Strauss Zelnick, the unbelievably good CEO of Take-Two Interactive Software (TTWO) laid out last night, and it's a secular change in behavior, not something that's going to switch back any time soon.
Which is why today it was so hard to figure out what to pay for Action Alerts PLUS charity portfolio holding Starbucks (SBUX) . Out of nowhere Starbucks, long a standout among retailing and hospitality giants, has simply become the best house in a bad neighborhood. It's got excellent cash flow, a boosted dividend and good same-store sales, all of them not what I was hoping for in terms of an upside surprise but certainly better than anyone else. It has a terrific Chinese kicker, as China will become the largest portion of the chain in a short period of time.
All that said, Starbucks has carved out a reputation as the Third Place, meaning that it is the place to go between home and work to enjoy oneself, have a good cup of Joe and something to nosh on and be satisfied.
But how about if you aren't really going out? How about if you goal is to get to work and go home as soon as possible? How about if you don't need a third place anymore, because you are saying at home?
We have always liked Starbucks because coffee can't be Amazon-ed. There are only a handful of retailers that can make that claim. But on the conference call, CEO and founder Howard Schultz talked about an Amazon factor that has to do with actual foot traffic diminishing because of Amazon (AMZN) . People don't need to go out as much if they can shop at home more cheaply. And then there's the overall delivery factor. We have had Patty Doyle from Domino's Pizza (DPZ) on Mad Money multiple times and it is very clear that his combination of inexpensive tasty pizza and technology that drives it to you without having to talk is a winning one. Hugely winning.
Again, though, it is stay-at-home.
So it begs the question: what can and will you pay for the stock of a retailer, even one of the very best quality? I think the answer is ultimately less than you would have at another time, because the stock market is like a supermarket and big investors are going to want to pass up on the aisle of the consumer who goes out and instead focus on other aisles until the stock get so cheap that the numbers that were reported today seem like a blessing.
That does not mean that a stock like Starbucks should be hit. It said many, many good things. It does mean that people will, increasingly, want to avoid stocks that require consumers to go out to buy things and instead will focus on in the stocks of areas of the economy that have the tailwind of the stay-at-home thesis going for them instead of the headwind of the consumer's desire to leave the house to visit any place, including one known as the Third by so many, including me.