29Jul11:15 amEST

The Bull Case for Chotchkie's

As several of our Members astutely noted of late, some viable rotation sectors and stocks are emerging in the event the plethora of prominent earnings reports in large cap tech later this week (e.g. AAPL AMZN FB GOOGL all on Thursday evening) do not result in business-as-usual continuation gaps higher or now-you-see-it-now-you-don't ephemeral dips lower. 

Retail is one space we are looking at. But within consumer discretionary there are, of course, the restaurants. 

Interestingly, in this cycle restaurants as a group have been some of the hardest hit small businesses across the country, referring to closely-held "mom & pop" bistro types of places. Those small businesses are still on hold in places like New Jersey or New York City where indoor dining/indoor bars remains elusive in the reopening process.

Indeed, while mom & pop are largely having plenty of trouble re-hiring workers, pivoting to outdoor dining/take-out/delivery anywhere close to making their business economically viable again, the large, publicly-traded chains are having a somewhat easier time on top of their timely PPP injections. Simply put, the restaurants which have scaled nationwide which survive this cycle are highly likely to gain market share and a new batch of consumers they otherwise may not have had, but-for the pandemic. 

WING is a name we have profiled on this website before. And the take-away chicken joint is screaming higher this morning after all earnings. Looking at other names, BLMN has potential (Outback Steakhouse owner), though right now the better chart is TXRH, below on its daily before earnings next Monday. 

Either way, the restaurant survivors of this cycle, even if the food and decor are as corny as the fictitious restaurant in Office Space (1999), figure to increase market share and thus are viable rotation candidates should mega cap tech take a seasonal breather into August/September. 

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