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Buying When Love Is In The Air
The economic decline is affecting both the way people feel and how they choose to spend their dollars on loved ones even on the day set aside to celebrate love. Instead of opting for jewelry from industry players like Tiffany & Co. (NYSE:TIF), Blue Nile (Nasdaq:NILE), or Zale Corporation (NYSE:ZLC) gift givers seem to have employed non-traditional ways to say, "I love you".
This change in spending illustrates a shift that will likely continue as the tough economic conditions persist. Smart investors will look to benefit from evolving consumer spending by shifting their attention toward a niche group of publicly traded companies. Below we'll take a look at a couple companies that cupid seems to have caught in his bow's sights.
IN PICTURES: Eight Ways To Survive A Market Downturn
Grocery Store Chains
Walking through Kroger (NYSE:KR) on Valentine's Day one couldn't help but notice the variety of young and refined men circling the stuffed animals, flowers and wine section of the grocery store. While I'm sure restaurants like Cheesecake Factory (Nasdaq:CAKE) and Olive Garden, from its parent Darden Restaurants (NYSE:DRI), had a strong showing, it's likely that a greater number of people choose to wine and dine themselves at home. The lines I had to navigate through at Redbox $1 DVD Rental machines at more than one grocery store location gave me time to consider and confirm this claim.
Speaking of Movies
The stay-at-home theme for this V-Day could also mean that Netflix (Nasdaq:NFLX) customers who thought ahead and put their favorite action, love, children's or drama flick in their queue will have enjoyed their night on the couch. Investors should take note of the Netflix's high short interest ratio of 8.2, which suggest its stock, currently trading in the $38 range, could go higher as outstanding short positions are covered. Netflix has a great service and investors considering an investment here should employ a dollar-cost averaging approach since the stock has been on an upward trajectory since the beginning of the year and chasing performance with a one-time purchase is more risk than an investor should assume.
Why Pay Now?
According to BIGresearch, average consumer spending for 2009 is expected to increase slightly over the previous year's $119.67 to $122.98 for a total of just over $17 billion. With concerns growing over spending cash, consumers may decide to put more of their gifts of affection on credit. The positive influx of transactions could stand to benefit Visa (NYSE:V) and MasterCard (NYSE:MA). The two credit card transaction processing companies have outperformed the SPDR S&P 500 Index ETF (NYSE:SPY) since the beginning of the year. Value investors will also take notice of Visa and MasterCard's low price/earnings to growth ratios of 1.14 and 1.02 respectively. (Find out where this data is found in our related article How To Fine P/E And PEG Ratios.)
Final Thoughts
Gifts involving experiences versus physical objects were expected to be a bright spot this V-Day season. Just looking to the gift you gave your sweetheart this year can give you a direction in which to pursue your investing research.
To learn more about how market downturns affect companies, read The Impact Of Recession On Businesses.
This change in spending illustrates a shift that will likely continue as the tough economic conditions persist. Smart investors will look to benefit from evolving consumer spending by shifting their attention toward a niche group of publicly traded companies. Below we'll take a look at a couple companies that cupid seems to have caught in his bow's sights.
IN PICTURES: Eight Ways To Survive A Market Downturn
Grocery Store Chains
Walking through Kroger (NYSE:KR) on Valentine's Day one couldn't help but notice the variety of young and refined men circling the stuffed animals, flowers and wine section of the grocery store. While I'm sure restaurants like Cheesecake Factory (Nasdaq:CAKE) and Olive Garden, from its parent Darden Restaurants (NYSE:DRI), had a strong showing, it's likely that a greater number of people choose to wine and dine themselves at home. The lines I had to navigate through at Redbox $1 DVD Rental machines at more than one grocery store location gave me time to consider and confirm this claim.
The stay-at-home theme for this V-Day could also mean that Netflix (Nasdaq:NFLX) customers who thought ahead and put their favorite action, love, children's or drama flick in their queue will have enjoyed their night on the couch. Investors should take note of the Netflix's high short interest ratio of 8.2, which suggest its stock, currently trading in the $38 range, could go higher as outstanding short positions are covered. Netflix has a great service and investors considering an investment here should employ a dollar-cost averaging approach since the stock has been on an upward trajectory since the beginning of the year and chasing performance with a one-time purchase is more risk than an investor should assume.
Why Pay Now?
According to BIGresearch, average consumer spending for 2009 is expected to increase slightly over the previous year's $119.67 to $122.98 for a total of just over $17 billion. With concerns growing over spending cash, consumers may decide to put more of their gifts of affection on credit. The positive influx of transactions could stand to benefit Visa (NYSE:V) and MasterCard (NYSE:MA). The two credit card transaction processing companies have outperformed the SPDR S&P 500 Index ETF (NYSE:SPY) since the beginning of the year. Value investors will also take notice of Visa and MasterCard's low price/earnings to growth ratios of 1.14 and 1.02 respectively. (Find out where this data is found in our related article How To Fine P/E And PEG Ratios.)
Final Thoughts
Gifts involving experiences versus physical objects were expected to be a bright spot this V-Day season. Just looking to the gift you gave your sweetheart this year can give you a direction in which to pursue your investing research.
To learn more about how market downturns affect companies, read The Impact Of Recession On Businesses.
by
Gregory S. Davis
Gregory is a freelance writer for Investopedia.com. He has a consulting background in the banking, telecommunications and healthcare fields. Gregory is a graduate of the Wharton School of Business. Click here to visit his website.
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