Redirecting

Tuesday, May 04, 2010

Two More Economic Indicators: Bacon and Breasts

This morning I wrote about an honest economic indicator:  beer.   Then I read Hologic's conference call transcript, and was hit with another indicator: breasts.  Hologic is a big player in the female health space, specializing in breast imaging systems and their peripheries.  I'm long HOLX stock, with the basic thesis being one that was mentioned in the transcript: "the inclusion of additional lives entering the healthcare system and an emphasis on early detection and prevention could result in increased exams."

However, HOLX guided conservatively for the year, as they noted: 

"Relative to the second quarter last year, we have heard from many of our customers that there was a slight reduction in a number of screening mammography, and as a result, a reduction in biopsy procedures. We believe this is primarily due to the high levels of unemployment and resetting deductibles and co-pays, leading to the decreased wellness business"

Come on now.  If the economy is recovering so rapidly, then why are women cutting essential expenses like breast cancer screening?  Also, note, that they are talking about lower levels from what should have been an easy comparison in the 2009 comparable quarter.

Then, just when I thought I had another key data point figured out (bearish!), my wife returned from a trip to downtown Concord where she checked in with a high end candy store in town that specializes in candy apples coated in a variety of fancy products, which sell for about $5 each.  She brought me back a piece of the new product:  chocolate covered BACON - which is selling for $2 a strip.  My wife even got some channel checks from the store owner, asking if people were pretty much buying them as novelties.  The response was that people buy one in the store, and then buy 6 more to take home!  If people spending $2/piece on chocolate covered bacon isn't a bullish indicator, I don't know what is...  By the way - I know chocolate sounds good, and bacon sounds good, but chocolate covered bacon is mediocre at best.

So, we have bearish beer indicators from MolsonCoors, bearish breast indicators from Hologic, and bullish bacon indicators from the Concord candy store... I guess we'll continue to play the wait and see game.

-KD

note: I am long HOLX stock.  Also note: this post is certainly not intended to make light of breast cancer, and I hope that no readers are ignorant enough to read it in that way.

8 comments:

getyourselfconnected said...

I can say there was no lax spending at the Atlantis last week. I think plenty of kids' college funds went missing by the action at the roulette and blackjack tables!

You should try Pig Candy on a smoker, now that is a special treat.

Anonymous said...

Don't forget that the recommendations for mammograms have changed and are still in the process of being implemented at the health insurance provider level.
Also, several female friends that fall into the "not needed until you are older" category of the new recommendations are glad to volunteer to NOT get one - even if their provider has not changed coverage yet.

Kid Dynamite said...

thanks anon - good point. again, readers, although i don't think CEO's are omniscient, i think that they generally have a good idea about what drives their own biz's, and I'd hope that they'd mention change mammogram recommendations if they thought THAT was the driver of lower numbers... which is my way of saying that at least according to the guy who runs the business, the reason is is slacking is because of the economy...

GYC - when i was at the Atlantis a few years ago i saw a guy playing $15k on INSIDE numbers at roulette - which is pretty huge action. we were playing blackjack with a big hitter who came and threw us each a $100 chip to bet with as he left (we were playing green chips).

also, if you do cigars, the shop there had a guy rolling some tremendous handmades when i was there (Nicaraguan i think)

getyourselfconnected said...

KD,
The action was just like that, scary.

EB said...

Regarding the Beer Indicator, it could be a shift in beer drinking demographics away from the Coors/Molson type of beers. Certainly they'd never publicly admit that, and would always blame uncontrollable external factors, but there's an ongoing explosion in microbreweries in the Northwest and Northeast, and it continues to gain momentum at least in my (yuppie-who-doesn't-like-that-as-a-label) demographic.

Although totally anecdotal--plus it's NYC and not the rest of the country--I can say that I've seen several nice new bars and restaurants open recently, most of which charge over $6-8 for a pint of beer and are totally packed on weekends.

Kid Dynamite said...

EB - let me know how those bars look on weeknights... weekend NYC (like most places!) channel checks are serious red herrings.

i already addressed the craft beer substitution effect in the beer post comments

But What do I Know? said...

If you've got enough scratch to shop at a high-end candy store, you don't mind shelling out a couple of bucks for a novelty item (quel dommage) like chocolate-covered bacon on a one-time basis.

I'd say your HOLX data point is better--the cost of medical care is going up for those with insurance, and breast exams are an item that can be put off. The fact that women are postponing medical check-ups (as opposed to men) has significance, IMHO--if that is what this means.

scharfy said...

Kd,

Good posts lately. I appreciate the occasional bullish indicator (in the interest of fair and balanced coverage)..

After the chocolate covered bacon post, I found this staggering moneymaking factoid:

The # of American males weighing over 300lbs is growing @ 8% annualized rate. (currently @ 3.8 million total).

Here's Milken and Roubini on the topic and many others Milken 2010 conference

I'm sure you're aware of these videos, but they are a great resource....