|Written by GSCR Staff|
|Tuesday, 24 July 2012 09:26|
Sustainability is a real issue in the stock market. Predicting when that bubble bursts is not as easy as making the prognostication itself. Nine months ago we cautioned that Chipotle Mexican Grill’s (NYSE – CMG - $302.67) growth was unsustainable and thus the valuation too high. It may have taken a while, but we have been proven right.
We still like casual dining stocks but they, like other consumer stocks, are taking it on the chin. Although I hate to say this since it is July, the back-to-school-season will start in a few weeks. Prudence says to avoid many consumer stocks for a spell and then search for some gems that will benefit from this seasonality. Bottom-fishing may be tempting but it is wise to avoid the consumer apparel stocks that have tanked recently such as Wet Seal (NASDAQ - WTSLA) and Fossil (NASDAQ – FOSL). An attractive low valuation alternative might be Delia’s (NASDAQ – DLIA - $1.43) while Hot Topic (NASDAQ – HOTT - $9.57) is a high-flyer.
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