Zachary Scheidt

Three Ways to Profit from the Drop in Consumer Spending

Captainccs - The dollar saved is certainly just as valuable as the dollar earned. That's why earnings came in as expected.

The problem is that the trend of saving through cutting costs cannot continue indefinitely. There is a finite amount of cost that can be cut before damaging a business. Conversely, if revenue were to experience an upward trend, the business would become even more healthy and productive - and likely leverage against fixed costs.

I'm all for saving and expect businesses to maintain a lean cost structure. But I won't pay a growth stock multiple for retailers who are not actually growing, but instead cutting back on expenses so it LOOKS like they are growing.

Thanks for the comment,
zachstocks.com

Three Ways to Profit from the Drop in Consumer Spending

Ted, I think you’re right… We all know the typical aversion to spending held by the majority of people who lived through the great depression. It completely changed the fiscal landscape of an entire generation. The interesting thing is that while it looks obvious that the retail bubble has burst as far as SPENDING is concerned, the EQUITY PRICES have yet to burst. But maybe we’re on the edge of seeing that happen.

There are certain areas within retail that could actually hold up well. We had an article on Carters (which makes baby clothes) - zachstocks.com/2009/05.../ - and I think there is potential for a few specialty stores like this to hold up well. But as a general rule, there are many retail chains which will likely have a very hard time this holiday season.

Thanks for the comment!
zachstocks.com

Chipotle: Setting up for Disappointment

I have to say I agree with you guys on the quality of the food and respect for the company. Considering shorting the stock is not a reflection of my view of management or the company as much as it is a reflection on my view of the price that investors have placed on the stock.

I have to say, just writing about the restaurant makes me hungry though. I'll always be a fan of the food.

Good luck guys and thanks for the comments!
Zach
zachstocks.com

Chipotle Mexican Grill: Does the Growth Justify the Price?

I don't think there is any question that the chain will be successful. My argument is that the stock more than accounts for that potential success. A poor market environment in 2008 has the potential to bring down multiples on strong and weak companies alike. I like the restaurant, I'm just exercising caution on the stock.