It seems people are ready to finally end the lockdowns due to the coronavirus pandemic and get out of their homes. Traders may be looking to capitalize on opportunities to buy the dip on popular businesses that will be reopening brick-and-mortar locations in the coming weeks and months.
One of the industries yet to fully return to pre-coronavirus operations is dine-in food and beverage. Physical locations that have been desolate for months are slowly beginning to reopen their stores, thus creating a possible profit opportunity for investors.
Time For CAKE?
One such restaurant is Cheesecake Factory Inc (NASDAQ: CAKE), the nationally popular destination with over 200 locations in the U.S.. Since trading at around $42 at the beginning of February, shares have dropped roughly 38% to around $26.50.
Chris Camillo, co-founder of Ticker Tags and co-host Dumb Money LIVE, says this presents a lot of opportunity as lockdowns begin to ease up.
“I am going long Cheesecake Factory because I believe that the shelter-in-place is going to transition here. It already has,” he said Thursday. “You have to get riskier if you want to make money on some of these bounceback stocks...and restaurants (are) the last kind of bucket you can get into.”
A Personal Indicator
Camillo is also the part-owner of Chelsea Corner, a hot restaurant in Dallas, Texas. He mentioned seeing his restaurant’s returning growth as an indicator of what’s to come for the entire food and beverage industry in the coming weeks — barring a major second wave of the virus.
“We’re doing 65% of what we were doing at Chelsea Corner (before the pandemic started) already,” he said.
Should a major of the market’s major securities bounce back as a result of increased consumer confidence and the end of lockdowns, Camillo also noted there are right and wrong times to let go of gains.
“We will stay in those rebound stocks for a long time, until the rebound is over,” he noted. “When everybody is back in the restaurants and it’s very clear and visible that no one’s stay at home anymore (it’s time to think about selling).”
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