So, let's say we don't get a stimulus. Let's say Washington let's us down again, and a tremendous number of people, particularly in the hospitality industry, find themselves struggling to put food on the table.
Does that mean we should just stop looking for ideas, because the market's been propped up by investors hoping for a bill that could inject a couple of trillion dollars into the economy? No, not at all, because this market just refuses to stay down. It can go down, but it just won't roll over and die. It won't even play dead.
What is to be done?
As I like to say, there's always a bull market somewhere, and in this market, there turns out to be a bunch of them that don't seem to be harmed or hampered by a failure to provide the stimulus that is needed to tide millions of people over until we get a vaccine.
Let's tick them down, because some of them are very surprising.
First, there's the relentless bull market in housing that includes Toll Brother (TOL) , DR Horton (DHI) , Pulte (PHM) and my favorite Lennar (LEN) . These companies are all benefiting from a transformation that no one ever thought could happen, a total change in the way we work. So many people wanted to live close to work that it became an imperative. The denizens of the long commute were typically people who were striving to move to the cities to be a stone's throw.
Now its all backward. In a Zoom (ZM) economy the further away the better, because you don't have to go to the central office. So, the demand is far outstripping the supply. I kept thinking that rates would inevitably go higher, because the economy is making somewhat of a comeback, and we don't have enough homes, so the prices are skyrocketing. Typically the Fed would raise rates to cool home buying. Not this time. We just heard from Fed Chief Jerome Powell that he is worried about the economy if we get no stimulus. So he's not going to stand in the way of the great urban exodus.
We just heard from Fed Chief Jerome Powell that he is worried about the economy if we get no stimulus. So he's not going to stand in the way of the great urban exodus.
Of course that means anything that goes into a home can go higher. So, tools, buy Stanley Black & Decker (SWK) ; appliances, pick up Whirlpool (WHR) ; furniture, that's Herman Miller (MLHR) for Aeron chair to make your home your office; and Wayfair (W) , if you are a young person and you need to do up your house without breaking the bank. If you a decent bank account, then go to Williams-Sonoma (WSM) , which allows you to cook in style, because if you want a nice meal you can't go out for one.
You can find all of the things you need to make your home into a one-stop entertainment center by going go Costo (COST) , Lowe's (LOW) or Home Depot (HD) . Roku (ROKU) completes your home by making it into a theatre now that the real theatres are dying off. Oh, and if you want a real home theatre, may I suggest Best Buy (BBY) ? They are all part of this gigantic bull market, the best there is.
We really didn't know what to do when we first realized that we weren't going back to the office. It was supposed to be temporary, so we throw in some Zooming if all goes well. Turns out there are all sorts of security issues when you work from home, so pretty much every cybersecurity company has gotten a boost. My favorites? I like Zendesk (ZEN) , Cloudflare (NET) and Palo Alto Networks (PANW) . No matter what happens with the pandemic, I think that many white collar workers are going to work at home at their discretion. The execs are going to work not only at their homes, but at their beach or country houses. It's that latter that's spurred still one more leg of home office equipment buying for those with no kids who don't want to go back or who have kids and might as well be schooled at the vacation home.
The evolution to the cloud turned out to be a revolution and that means the companies that facilitate the cloud are just getting far more business than they ever dreamed. The one that comes to mind, repeatedly, is Salesforce.com (CRM) , which has seen a dramatic acceleration in orders for all of cloud elements. The ones that I think are most exciting are part of the work.com cloud, which teaches companies how to reopen safely and effectively and will be even more important with this new leg of how to administer vaccines. Company chief executives, who have not looked at or obeyed these protocols will, ultimately I believe, find themselves in hot water, because Marc Benioff's company has figured out the best in class, safest ways to do things, and you don't want to be on the other side of angry, sick workers armed with plaintiffs' lawyers.
Now let's switch directions and go to the nascent bull markets, the ones that aren't yet seeped into the consciousness.
No. 1? Last-man-standing restaurants. When you think stimulus, you think of all the incredible restaurants that simply can't stay alive because of social distance rules. Their collapse is ongoing.
Their demise has been fabulous for a number of winners that are still buyable. I have been infatuated with the stock of Wendy's (WEN) for so long and it's been a huge winner. But I am not oblivious to the incredibly strong same-store sales numbers we got from McDonald's (MCD) , which made a rare announcement Thursday. Some of it is last-man-standing, LMS, from now on, but some is a new series of delectable deserts by the creative folks at Mickey D's, who have roped in Travis Scott to promote the Golden Arches with an eponymous meal. I keep waiting for McDonald's to embrace Beyond Meat (BYND) . Hasn't happened yet. But Walmart (WMT) -- which is in a bull market all of its own -- has and I see both Beyond Meat and Walmart moving inexorably higher.
I keep waiting for Yum! (YUM) to get better. Not yet. We have Domino's (DPZ) , which has been a huge winner, but some seemed bummed by the cost line when it reported Thursday. We will find out from the horse's mouth on "Mad Money" in the evening. Chipotle (CMG) ? I will tell you when you can stop buying it. There's much more to go. I think we were also a couple of quarters away from a substantial revision upward in the earnings of Starbucks (SBUX) , which is still way off its highs.
Now everyone knows Lululemon Athletica (LULU) and Nike (NKE) are doing well. But how about the nascent bull markets in Levis (LEVI) , which we had on last night. Inexpensive story. Matthew Boss, the genius at JP Morgan (JPM) has coined the term LAG, which is L Brands (LB) , American Eagle Outfitters (AEO) and Gap Stores (GPS) , all mall- based casualties that are either snapping back in earnings or, breaking themselves up to bring out value. I love sum of the parts stories; they tend to creep up over time and the end.
The used car market is the most amazing under-the-radar bull market out there. That's all about Group1 (GPI) , Lithia (LAD) , Carmax (KMX) , Carvana (CVNA) and AutoNation (AN) . I know they are all up substantially, but remember, we don't care where they are coming from, we care where they are going to and because the country en masse has turned against the mass transit and car-pooling, because we are still in the danger zone with both, a used car will do and they are all kings of used cars.
Bull markets can be boring as all get out. There's the bull market in liner-board, and cardboard, which is taking up International Paper (IP) and to a lesser extent the heavily indebted Westrock (WRK) . Agriculture is so strong that I don't even care if you buy the seed and crop protection companies like Corteva (CTVA) or the equipment companies like Deere (DE) and Agco (AGCO) .
Don't forget he forlorn chemicals, although when you look at the prices of their stocks, you might not exactly consider yourself early. This morning PPG (PPG) announced in advance a better than expected quarter. I don't think that ones done going higher. Neither is Dow (DOW) .
When the and chemicals are strong you need to think of the railroads. Lets make this real easy: Norfolk Southern (NSC) just announced in advance, and Union Pacific (UNP) , I think isn't done going higher.
There are plenty of others I could throw in, but what I really wanted to do here is demonstrate that despite a lack of stimulus there are some stocks that don't know when to stop going higher. They are off the beaten track or you don't think they can go up for more than just fits and starts.
As long as we have the pandemic and even after, I think they are here to stay.