How to Profit as America Goes to Hell (BJRI)

Spotting new trends is not always difficult.

It does require an open mind and enough time to read, a knack for discerning the new and useless from the new and lasting, a willingness to step out on a limb, make your case, take some heat, readjust and hopefully weather the crucible.

But that’s just half the game when the goal is to profit from trend spotting.

whichway

Parlaying an understanding of which way the wind is blowing into cold, hard cash is a separate exercise altogether.

And getting the timing right is also a challenge.

As many have learned the hard way, buying the right company years before it starts making waves is not a great strategy for earning jackpot riches. In fact, it more often leads to bankruptcy.

So what to do?

Follow along.

We’ve been examining the headlines and reading the surveys of late, and they’ve taken us down some surprisingly narrow alleys and hairpin turns, but we think we’ve arrived at something that’s worthy of your attention – IF you fancy making some moolah.

And it goes like this –

America is sick.

No surprise, really, for those who’ve been paying attention. And sick with a number of different maladies, some physical, some spiritual.

The numbers below demonstrate just how sick we really are. And how.

Consider –

1. We’re a nation that dwells alone.

The marriage rate in the United States is at a 93 year low. And that includes same sex couples!

That’s right. For the first time ever, single Americans now comprise over half our total population.

alone
And a tremendous number of the young and single (18 to 34 years of age) are still living with mom and dad – a full 31.1%!

And what has that wrought?

It could be the good book was onto something when it admonished us to tie the knot. Because the rate of depression, anxiety and overall deterioration in our mental and physical health appears to have mirrored our preference for solitude.

Thirty million Americans are now officially on anti-depressants. That, of course, doesn’t include the number not reported.

Americans also account for 80 percent of the global market for painkillers and more than 50 percent of all pharmaceutical drugs – even though we account for a mere five percent of the global population.

Now some might contend that we’re a wealthier society and can therefore afford to buy the drugs we need to treat the medical conditions we’re facing. And there’s an argument to be made there.

But it seems to wither when you consider that America is the most obese of all the industrialized nations (with Mexico running a distant second). Why, after all, should we consider our mental health to be in order when our physical health is so clearly a disaster?

sadder

That’s not to mention alcohol consumption. A recent survey shows that nearly 60 million Americans have an alcohol addiction problem and nearly seven out of ten take some sort of prescription meds, according to findings from the Mayo Clinic.

Seven out of ten!

Could it get worse?

Maybe.

The Centers for Disease Control and Prevention in Atlanta reports that one third of the population is currently suffering from a sexually transmitted disease (!) and that the U.S. has the highest STD infection rate among all industrialized nations.

OUCH!

To take it a step further, new statistics on suicide show that it has now overtaken car accidents to become the number one killer of Americans who die by injury. Sadly, a great number of those suicides are military vets who’ve gotten on in years and haven’t been offered the treatments they need.

enough

It may seem rather mercenary to try to pull together an investment strategy that profits from the whacked nature of American society in the 21st century, but we’re not here to mourn America. Nor do we delight in any of the statistics we’ve cited above. And surely we’re no different from any of our readers who have family members or who themselves might be suffering from the plague of ill health and depression that’s so stricken our nation.

And yet we’ve been tasked with the job of making money.

So we forge ahead. Without smiles or tears.

And we ask the question – who is going to profit from an increasingly single demographic that’s both sad and overweight and likely has some spending cash because it has no dependants and/or lives with ma and pa?

Fast food restaurants.

But not any old fast food restaurants.

Upscale fast food restaurants.

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Our analysis of the best of the upper-end, publicly-listed fast food outlets led us to California based BJ’s Restaurants, Inc. (NASDAQ:BJRI), a company with a market cap in excess of a billion dollars that operates 150 restaurants that focus on deep-dish pizza and beer.

Since the bear market bottom in late 2008, shares of BJRI are up over 300% and we feel the time is now right to sit down and take a bite of this ‘casual-plus’ investing experience.

Why?

As the chart below shows, shares of BJ’s have retrenched since hitting all-time highs back in February of 2012.

bjri
A technical beauty we’ve got.

• First, we have positive divergence of the weekly RSI and MACD readings since last November, before the stock actually bottomed (in black),

• Three long-term waves lower (in red) completed and traversed,

• A bounce off the long term weekly moving average (in yellow), followed by a 40% climb that brought price above all her moving averages (in blue).

And the daily chart also looks bullish.

bjridaily


• First, we have a clear pattern of higher highs and higher lows (in red),

• All the stock’s moving averages have turned higher for the first time in two and a half years (in green),

• And RSI and MACD indicators are above their respective waterlines (in black).

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All of which points to continued gains for BJ’s.

The Profit Hunter therefore recommends you consider the speculative purchase of the BJRI April 45 CALLs for $1.75 and sale of the April 30 PUTs for $0.85. Total debit on the trade is $0.90 per pair traded.

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All of which points to continued gains for BJ’s.

The Profit Hunter therefore recommends you consider the speculative purchase of the BJRI April 45 CALLs for $1.75 and sale of the April 30 PUTs for $0.85. Total debit on the trade is $0.90 per pair traded.

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With love of the hunt,

Hugh O’Haynew, Senior Analyst, The Profit Hunter

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