Non-Financial Alert: get in early to prevent disappointment
24th September 2020 |
Before I kick off today’s weekly update, I thought I might share with you a non-financial recommendation.
It’s my birthday this weekend.
I use this late September milestone as a chance every year to remind me about some other stuff that’s coming up soon… namely Christmas.
Now, I like Christmas. And here in the UK there’s always a much more Christmassy feel to things compared to back home in Australia… probably has something to do with the cold vs blistering heat.
Nonetheless, here in the UK everyone seems to really get into the Christmas swing. I love that. But it also means there’s usually a mad rush to get all things Christmas and most people leave it until really late in the piece to sort it out.
Not me.
The September birthday comes with a couple of calendar reminders, namely, “Sort out Xmas dinner!”
This time every year being just under three months out from Christmas Day, I put in my orders for all the Christmas Day dinner stuff I need. My traditional Christmas pudding, turkey, trimmings, the whole shebang.
That way, I’m not leaving it too late, I can get my pick of delivery slots, I’m locking in a quality Christmas dinner early on, and then it also means the Christmas expenses don’t just pile up in late December.
I’ve already now ordered and booked my delivery slot for all these things. And I’d suggest if you’re impartial to a lovely Christmas dinner you do the same, and do it early.
Here’s why…
- Most people in the UK will be staying in the UK this Christmas
- The pubs and restaurants may be shut
- If the pubs and restaurants aren’t shut, they’ll likely be on very reduced capacity.
This means that a lot more people than normal will be having Christmas dinner at home. And that means a mad rush will ensue as people realise there may be a limited supply of all the good Christmas dinner stuff.
Even before “The Rona” hit, it was always a mad rush to get the good Christmas dinner stuff. And often turkeys, hams, all the meats would sell out unless you got in an early order.
Well imagine what it’ll be like this year.
I’m just saying, do yourself a favour and if you’re planning a Christmas dinner at home this year, get onto it early, as in right now, then you won’t set yourself up for disappointment later on.
Now, back to my birthday…
Usually I’m not that fussed about doing anything special. I’d rather spend the time with my wife and son (and cat and dog) than have loads of people around.
Thankfully the current government restrictions on socialising fits right into my preferred way to spend a birthday.
Nonetheless, I will still be heading out to a pub/restaurant on Saturday night. The kind of place that we refer to these days as a “gastropub”.
I’ve not actually had a sit-down meal like this since everything kicked off.
I’ve been to a pub and had a pint, but not a proper sit-down meal. I’m sure it’ll all be very nice but I also suspect it’ll be a little weird.
Even my wife asked if we had to wear face masks when we go. I wasn’t 100% sure to be honest. I suppose we have to wear them as we go through the door in case Covid-19 attacks us on entry, but then don’t have to wear them when we’re sat down because Covid-19 doesn’t like hanging around sat-down diners.
All very confusing as I’m sure it is for you too.
Anyway, while this might be my first sit-down meal at a gastropub in quite a few months, it might also be my last before Christmas. Or possibly until next year.
That’s the kind of threat that faces the pub and hospitality industry… again.
The imposing threat of further and harsher lockdowns is upon us. Already I believe we’ll have to exit my birthday dinner on Saturday night by 10pm, because we all know that’s when the Covid decides to arrive and attack the pub patrons.
If this keeps up or gets worse for the pubs and hospitality industries, then what should we make of it as investors?
Specifically right now, what about our pub stock, Marston’s Plc (LSE:MARS)?
Marston’s peaked after our recommendation in early June off the back of an announcement with Carlsberg UK. The two would be forming a joint venture to scale up the brewer and improve distribution and the bottom line of the company.
That was then delayed due to some extra oversight in July from the UK Competition and Market Authority – pushing out the JV completion until likely Q4 this year, which we’re about to step into.
That helped ease Marston’s stock price lower. But it’s been the continuing uncertainty about pubs and their ability to remain open or closed that’s squeezed the stock in the last couple of weeks.
Implementation of a 10pm curfew no doubt also spooked investors. However, it’s important to note, a curfew probably doesn’t hit the company as much as you might think. Speaking about the curfew, CEO Ralph Findlay said,
“If you look at the amount of business we do after 10pm across our 1,400 pubs that is about five per cent of turnover.”
Yet if pubs are forced to close like they were in March, then we could see another repeat of all stocks across the sector getting hammered.
We’ve also got to remember that the first hammering in March brought Marston’s down from around a 100p stock price to 22p. And in my view another lockdown of a significant nature wouldn’t hit the stock as hard as that.
Furthermore, we’re actually still in a profit position with Marston’s. Should the stock head back lower towards our entry price or even towards the bottoms it saw in mid-March, then I think Marston’s could again become a raging BUY.
The stock is still on hold for now, and our buy limit on the stock was 37.5p. I’ll review this ongoing but for now just wait and watch. If Marston’s heads lower and trades at or below 37.5p, it will move to a BUY recommendation.
I still see huge bounce back potential in Marston’s. And the JV with Carlsberg UK has huge potential if it’s approved in the coming quarter (which we expect it will be). This is one pub stock to keep a close eye on and to be ready to pounce on again if the timing is right.
Regards,
Sam Volkering
Editor, Frontier Tech Investor
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