EDGE TRADER

Sunday, July 31, 2005

The "chain" gang weekend

Lets count the chains: Americans these days are chained to the chains. So here's the recap from my family's use of publicly traded chains this weekend.

Chain # 1: Dinner. Friday night. We are generally too beat to fire up the barbecue or oven on Friday nights. When we can tear our kids from their neighborhood play gang on Friday we go out. If not it is pizza on the deck. No kids in sight so the trip out was a go. Panera Bread (PNRA) bills itself as the "fastest growing" something in America. Sounds interesting... Food is always good, but it's carb heavy thanks to that slab of bread they give you. In the northeast, this stuff is comfort food, I love this stuff in February. Looks like the masses agreed because it was empty. The staff is well trained and super friendly (translation: my order taker was hot), but I am sure that our local branch won't be doing much to increase same unit sales this quarter. Everyone is on vacation!

Chain #2 Netflix. This was the after kids went to bed. A stock I owned in June and made me tons of money the day that Wal-Mart announced its exit from this line of business. I wish I waited for the subsequent drop and repurchased so I could sell at the last earnings announcement. We are on the verge of cancelling. We have been subscribers since February or March and have seen virtually every DVD we ever want to see. So we will enter a cooling out period until at least November before re-subscribing. As a former customer of Blockbuster's DVD by mail service, I can tell you firsthand, Netflix dominates this industry. I would never go back.

Chain #3 Friday's. My kids love going to places where the menu has cartoon drawings instead of words on the kids menu. That, in essence is why we went. I for one noticed an empty restaurant and ate soggy fajitas. This is not a glowing review.

Chain #4 Cabela's. The world's premiere outdoor outfitter. We visited the Hamburg, PA store. We had never been - as former New Englanders we were hoping that this would be comparable to our trips to LLBean in Freeport, Maine. I was impressed with the collection of taxidermy (we're talking elephant, alligator bears, deer, wildebeest, zebras, even a deer being eaten by an alligator...). A fully stocked trout pond. The kind that I put on my mental notes of places to stop should all grocery stores be annihilated by AlQaeda - I could easily feed my family by wading in and grabbing a lifetime of trout almondine with my bare hands. No - we didn't use the free dog kennel or horse corral outside. The merchandise was not my cup of tea - you need to enjoy spending time chasing and killing wild animals on your weekends for this to be a place you regularly spend money at. But I can see this being a solid retail concept that could be expanded. Plenty of people in America love shooting animals, hence the possibility for continued double digit growth? So I did some DD. It's funny how all this time spent got me to the same words I uttered when first walking inside: "man, it must have been expensive to build this place" - yes, the company is struggling with the capital investment to expand and build new outlets. The stock had an interesting chart - cup and handle + bearish engulfing following earnings. If this stock gets hammered I may pick some up on the cheap, but too rich and risky for me at this price point. I'll bet short interest is high, but I don't care enough to check now. I think eventually they will get through this and have a bull run, but right now choppy waters for them. Q1 2006 it may be a good one to own if you can enter in the mid teens.

Back to business: plan for this week coming up:

Swing trade in XEC, Remington or CHK if we should be presented with (as expected) a day with crude in the $57 range, followed by exit once crude crosses into the $60+ range. If and when opportunity presents itself. Choose security that offers best possible entry. No chance of Cramer hitting the bear button on any of these securities so they are relatively downside safe. Preferred entry will be at lunchtime on Monday or Tuesday. Let's hope crude co-operates.

Earnings play on REM? Reports Tuesday ATB.

Sell 50% AAPL, YHOO, LGF, 50% INTC on strength if possible to book gains.

Exit EFJI prior to Tuesday's earnings.

Gap trade purchase Monday, Tuesday, Wednesday. Sale at open following day. Avoid earnings.

Goal to be 50% cash by Friday.

5 Comments:

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