Stocks Consumer Discretionary Part II: CCL, CMG, DG

Carnival cruise lines operates half the world’s capacity in cruises and so it is clear bet on the leisure industry once you abstract above the fact that they get a new ship once in a while. Leisure is not a good bet in my view because most people don’t need leisure, they just work all day and get it from staycations. The concept of leisure comes from leisure travel which arose from people getting more money like in Japan in 1800s, so it’s all money-driven spending on leisure which will plummet as soon as economy craters.

Chipotle Mexican Grill has had some struggles in same store sales of food and drink after food poisoning in 2015, and has had problems opening new stores to expand the growth as they have been experiencing some saturation it looks like. I’ve eaten at Chipotle as well and while the food is wholesome, it is not necessarily that healthy because of how much they braise the meats (it is a meat heavy meal usually). I don’t know if they can sell themselves as a health foods restaurant but if they manage to recover as they’ve implemented testing measures that sound very scientific, it is a good stock. Chipotle is just a decent meal. They’ve underperformed the market.

Dollar General is a discount store that emerged out of a private equity reorganization, and they talk about consumables and nonconsummables as fodder for people to model their earnings but really we know that their cash flow increases are not necessarily rewarded in the stock market because it still is a business that is quite specialized, carrying a select set of items and not a wide range, for people who don’t want to or can’t spend that much money. They are also vulnerable to trade wars with China. I wouldn’t invest now especially as they have tracked the s&p but fell short of the retailing index: they are just an easily manipulated company that seeks rewards for their stock price and have “good” relations to employees.

In the end, also, Lincoln wouldn’t be a democrat today, he would be a Canadian. To think of yourself as some other country when you are not defensibly in that context is manipulative, even if you can have a good conversation as such as after the conversation people will revert. Same goes for stocks: if they don’t have a defensible business, but seek to manipulate their results to sound impressive on cash, move on. Always choose also the friend who may disagree with you but speaks his mind over the friend who tells you not to speak your mind.