As many of you may know, last week was the Las Vegas MoneyShow. I had a number of fascinating conversations during the conference, where I made several presentations, hosted a few panel discussions and capped it all off by appearing on “Making Money with Charles Payne” on FOXBusiness, which broadcasted live from the conference.
The highlight of these conferences for me is connecting with you to learn more about what you’re looking for, what you need help with and how I can continue to make my newsletter and trading services even better for my subscribers than they already are. Many thanks to the longtime subscribers who stopped by to chat, as well as all the new ones who have joined the ranks.
As you can imagine, there were many messages I received from MoneyShow attendees, as well as several of my own, that I had hoped to share. From how I see the world through PowerTrends (the intersection of economics, demographics, psychographics, tech, regulatory mandates and more) to the success my subscribers have had, from stocks vs. options to where I see the economy going. We talked about the state of the domestic stock market, international opportunities, when to buy a position, add more or sell.
On the whole, my presentations were well attended, as was the luncheon debate that I moderated entitled “Stocks to Weather an Aging Bull Market.” The best-attended of my presentations was the standing-room-only “Option Secret That Made My Subscribers 717%,” which reviewed the call option recommendation I shared with subscribers to PowerOptions Trader on Kraft (KRFT) shares several weeks back. While the recommendation was a fundamental one based on falling pork and cheese prices, it was Warren Buffett who helped deliver the outsized return with his merging of Kraft and Berkshire Hathaway’s (BRK.A) Heinz business.
This gets me back to one of my messages at the Las Vegas MoneyShow — do not forget about an industry’s or a company’s cost structure, particularly those key inputs that can add to or weigh on profits depending on their current vector and velocity. Let me give you an example…
As my subscribers know, in January of 2014, I was rather bearish on restaurant stocks, such as Red Robin (RRGB) and Del Frisco’s (DFRG), given the sharp move higher in beef prices. Given the amount of time it takes to grow the herd, I didn’t expect any dramatic reversal in beef prices for a while. Beef prices ultimately peaked in September of last year and have been on a steady move lower in the ensuing months. While still up year over year, the recent direction in beef prices should be helpful to those companies using beef heavily. Perhaps McDonald’s (MCD) has something to look forward to after all; now if only the company can get its act together to compete with Shake Shack (SHAK) and Wendy’s (WEN), which will also see similar benefits.
When I was bearish on beef last year, I was bullish on chicken as an alternative, particularly for the cash strapped consumer as well as restaurants — casual dining and fast food — that were shifting their menu toward the bird over beef.
Ah… how things have changed — for just as we’ve seen a move lower in beef prices, chicken prices have continued to climb. During the last year, chicken prices are up more than 7%, but a longer perspective shows they are up more than 35%. Part of it can be blamed on the higher-protein diets we’re seeing across the globe and the consumer trade up in the emerging markets.
More recently, however, it’s the outbreak of bird flu that is wreaking havoc on chicken and related industries. Last week alone, the U.S. Department of Agriculture (USDA) confirmed that the virus had turned up in more than 20 additional facilities in the Midwest, condemning another 4 million birds to euthanasia.
Altogether, the H5N2 virus — “highly pathogenic” to birds, so far non-threatening to humans — has affected 168 sites and a jaw-dropping 36 million birds, making it the largest avian flu outbreak in U.S. history. Given the simple laws of supply and demand, this means that chicken prices will continue to march higher, which is not good for the consumer and therefore not so good for Pilgrim’s Pride (PPC) and Sanderson Farms (SAFM) shares. Tyson Foods (TSN) remains in a unique position because it’s not a pure chicken play and in fact generates the bulk of its revenue from beef.
The bird flu virus is also taking a toll on eggs, as reports indicate it has wiped out 40% of the egg-laying flock in Iowa, the number-one egg-producing state in the United States. As you can imagine, egg prices have been on the move higher, and, according to Rick Brown, an egg industry analyst with commodity market firm Urner Barry, it’s because more than 10% of chickens that lay eggs for food are dead or dying from bird flu. This development forced the USDA to lower its 2015 projections for egg supplies last week, saying that the discovery of bird flu in Minnesota, Iowa and other Midwestern states will constrain egg production.
That’s not good news for shareholders of Cal-Maine Foods (CALM). Wondering how you can profit from this? Easy. You can get my latest pick — just released this morning — in my PowerOptions Trader service (at a special discount). Click here to take advantage right now.
In case you missed it, I encourage you to read my e-letter column from last week about how the Verizon-AOL merger fits my Always On, Always Connected PowerTrend. I also invite you to comment in the space provided below my commentary.
Special bonus for you and a friend… but this won’t last long! I want to invite you on a cruise, Sept. 13-20, with Newt Gingrich, Dr. Mark Skousen and me, among others. After you book your cruise, when you refer someone else and they book their own cabin before Friday, June 5, you will BOTH receive a $100 shipboard credit to use anywhere onboard!
Many cabin categories are already sold out, while some only have two to three cabins left. Make sure you and your friends book now to secure the best cabins still available!
Hurry, this offer is only good until June 5! Call now to get the best cabin selections while there’s still availability and to secure a $100 shipboard credit for you AND your friend!
Come spend seven fabulous days aboard the six-star luxury liner, the Crystal Symphony. The cruise is at a perfect time to enjoy the scenes in Bar Harbor, Halifax and Sydney in Nova Scotia, Quebec City and Montreal. While at sea, we will have two days of exclusive events with our speakers discussing the political scene (including the next presidential election) and how to best profit in today’s market. For further information, including how to sign up, call 800-435-4534 and mention priority code 039044 to get your $100 shipboard credit for you and your friend. The cruise is not to be missed!