Daily Gains Letter

U.S. housing market


Positive Numbers for U.S. Economy Driving Business to Restaurant Stocks

By for Daily Gains Letter | Nov 28, 2014

U.S. Economy Driving Business to Restaurant StocksRecently, in the U.S. economy, we have been seeing decent jobs numbers, cheaper gas prices, and appreciating wealth in the housing market. The end result is consumers with more money to spend on things that make them happy, such as dining and travel. And I can see an investment opportunity opening up in some restaurant stocks.

When people are confident with their financial situation, they tend to spend more freely.

Take a look at the chart of the Dow Jones US Restaurants & Bars Index, which has been edging higher and appears to be breaking out following a sideways channel. I feel there’s a continued investment opportunity in the sector, as long as the economic growth holds and people continue to feel confident.

Dow Jones US Restaurants & Bars Chart

Chart courtesy of www.StockCharts.com

Whether it is fast food, family dining, or higher-end dining, the restaurant business is all about marketing food that appeals to diners and meets their needs.

The Long-Term Investment Opportunity: McDonald’s

Over the last couple of years, one of these restaurant stocks was McDonalds Corporation (NYSE/MCD). The seller of the “Big Mac” with the famous golden arches had its issues years ago when diners were caught up in the move to healthier eating. McDonald’s revised its menu and added healthier choices, which resulted in the stock surging back to the top of the restaurant sector.

While McDonald’s remains a long-term investment opportunity, the company has been facing competition from new entrants into the fast food market that offer alternatives.

The Rapidly Expanding Investment: Chipotle

An investment opportunity in restaurant stocks over the past few years has been Chipotle Mexican Grill, Inc. (NYSE/CMG), which … Read More


What’s Handicapping First-Time Homebuyers?

By for Daily Gains Letter | Mar 24, 2014

First-Time HomebuyersFor months and months now we’ve been pointing to seemingly obvious economic data to prove that the U.S. housing market is in trouble because of the weak U.S. economy. Those in the “know”—economists and the real estate board—have been waxing eloquence on how the weather is the main culprit behind the disappointing U.S. housing market numbers.

The National Association of Realtors (NAR) said existing-home sales in December were adversely affected by bad weather in many areas. Sales of existing homes in January were down 5.1%, reaching their lowest levels in 18 months. At the time, the NAR echoed it’s sentiment from the previous month and said the prolonged winter weather was playing a role and positive housing market activity would be delayed until spring.

Well, spring has sprung, and it looks like blaming the weather is getting a little old. Existing-home sales in February fell 0.4% month-over-month and 7.1% year-over-year to their lowest level since July 2012. (Source: “February Existing-Home Sales Remain Subdued,” National Association of Realtors web site, March 20, 2014.)

First-time homebuyers, the litmus test for how well the economy is doing, accounted for 28% of purchases in February—that’s up from 26% in January (which was the lowest market share since the NAR first started compiling monthly data). In February 2013, first-time homebuyers accounted for 30% of sales. The 30-year average for first-time homebuyers is 40%—a number both real estate professionals and economists consider ideal.

As per usual, the U.S. housing market is being propped up by those with lots of money. All-cash sales made up 35% of sales in February—up from 33% in January and 32% in … Read More


What Investors Can Learn from the Company That’s Always Ahead of the Curve

By Sasha Cekerevac for Daily Gains Letter | Jan 22, 2014

Portfolio Using Just One StockOne of the hardest lessons to learn is to buy assets when others are selling them. As an investment strategy, if there is value in something, at some point, the market will rebound, provided that there are fundamental reasons for this to occur.

Take the case of our housing market. From the depths of the Great Recession until now, the housing market has made a huge move up. Yes, it was pushed by the Federal Reserve, but there were fundamental reasons why the housing market showed value as an investment strategy.

One company that I’ve liked for many years is The Blackstone Group L.P. (NYSE/BX). This firm is filled with smart people who are willing to buy an asset when others are negative, looking at the investment strategy from a long-term point of view.

Blackstone has become the largest single-family housing rental company in the U.S. When the housing market collapsed, they saw an investment opportunity, as many homes were selling below the cost of building them. Plus, the yield they were able to obtain in the housing market was far higher than many other investments at that time.

The company bought more than 40,000 homes in the U.S., spending $7.5 billion. Obviously, Blackstone made a huge return in the U.S. housing market. But now Blackstone’s turning its sights overseas.

The U.S. wasn’t the only nation to be hit with a housing market meltdown. Spain’s housing market has seen a 40% drop in prices, and Blackstone now believes this, too, is a great long-term investment opportunity.

Blackstone recently paid $173 million for 18 apartment buildings in Madrid, and the company … Read More


Washington’s Dysfunctions Making U.S. Housing Stocks More Attractive?

By for Daily Gains Letter | Oct 14, 2013

US Housing StocksThe best time to look at certain sectors and stocks is when investors are running for the exits. Unfortunately, the U.S. government shutdown and looming debt ceiling deadline have sent investors scurrying in every direction. Still, one area that will be negatively impacted should the U.S. government shutdown continue and the debt ceiling limit not be raised is the slowly rebounding U.S. housing market.

That doesn’t mean investors should shun the U.S. housing market and homebuilder stocks altogether; if anything, the current lull is the perfect time to take a closer look at this sector. Both the shutdown and debt ceiling will eventually be in the rearview mirror and the wheels of economic progress will sputter back to life.

According to the latest S&P/Case-Shiller Home Price Index, U.S. house prices rose 12.4% for the 12 months ended July 31, the biggest annual increase since February 2006. Home prices, which have climbed 16% since the beginning of 2012, are still roughly 22% below their 2006 pre-recession highs, meaning, there is still plenty of room to run before the U.S. housing market can say it has fully recovered.

Unfortunately, the U.S. government shutdown and fears about the debt ceiling are coming just as construction and new housing sales are beginning to show signs of life. Residential starts in August were up slightly (0.9%), with an annual pace of 891,000—a marked improvement over the April 2009 low of 478,000 starts.

There are a number of ways a long-term government shutdown would exacerbate growth in the U.S. housing market. Because federal employees are furloughed, there is no one to approve mortgages; those in the … Read More