January 05, 2012 at 08:36 AM EST
5 Stocks Susceptible to Hermit Consumers
A JPMorgan Chase Card Services survey shows consumers are going to tuck further into their shells this year -- here's who could be hurt or helped by the trends.
JPMorgan‘s (NYSE:JPM) Chase Card Services released a survey Wednesday regarding how consumers might alter their behavior in 2012. The results indicate little faith in an improvement for the economy, and therefore Americans will be taking more of an independent approach to many daily activities. That, of course, suggests several stocks might be impacted.
“46% of respondents say they will exercise at home or outdoors instead of paying for a gym or health club membership. Additionally, 59% plan to pamper themselves at home rather than visiting a spa or salon this year.” Fortunately, fitness companies are all private, so they won’t get hit. But that might not bode well for fitness clothiers like Lululemon Athletica (NASDAQ:LULU). You want to look stylish when you hit the gym, but at home, you can look like the slob you know you are.
As for the home-spa angle, good times could be ahead for beauty product providers. That means a company like Nu Skin Enterprises (NYSE:NUS) might see some prettier earnings this year. It is a direct-selling company that develops and distributes premium-quality, innovative personal care and nutritional products. As it happens, 13% of the stock is held by various funds under the Royce name — a fund family I happen to respect above all others.
As far as vacationing is concerned, two-thirds of the survey’s respondents said they would indulge in 2012, though 41% said they’d be saving money by staying on the road. Eighteen percent said they would take a “stay-cation.”
67% are vacationing? That means good times for the hotel sector. There are many ways to play this group, but the best bet of all — hands down — is Ashford Hospitality Trust (NYSE:AHT). The company owns more than 160 hotels in the upscale tranche, with numerous brand names including Hilton, Crowne Plaza and Renaissance. Ashford has brilliantly managed liquidity and debt both during and after the financial crisis, and it just bumped its dividend to 44 cents per share, or a 5.5% yield. Ashford also has the strongest balance sheet among hotel stocks.
However, 41% road tripping means even worse times for airlines. With American Airlines now in bankruptcy, this information gives us one more reason to avoid the sector — and quite possibly short it. Personally, I’ve had the worst service from JetBlue Airways (NASDAQ:JBLU), and I think quality matters in this environment. I’d short it.
“29% say they prefer to celebrate a special occasion with a home-cooked meal, rather than going out to eat at a restaurant.’’ Holy bad tipper, Batman! I’d run away from restaurant stocks in that case, and instead buy the grocery stocks. I happen to think Whole Foods Market (NASDAQ:WFM) is the long-term play here, as the “Great Organic Food Is Healthier For You” hoax continues unabated.
Then again, you can be your own hermit consumer and not invest in stocks at all. In that case, look into mattress company Select Comfort (NASDAQ:SCSS).
As of this writing, Lawrence Meyers owned shares of Ashford Hospitality Trust.
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