In an economic slump you have to hunt for where the growth that will drive the recovery starts. Looking at young adults that tend to opt for luxury, gaming and telecom are all places where you can defy gravity. Looking good, feeling good and prospecting for new revenue are places where expenses are not often spared.
We can start with lululemon athletica (Nasdaq: LULU), which earned $0.30 a share when analysts were only banking on a profit of $0.24 a share.
The retailer specializes in high-end athletic apparel for women, and the chain’s 31% spike in same-store sales proves that you can still move luxury goods in the iffy economic climate. There’s a reason why pricey denim sellers True Religion (Nasdaq: TRLG)and Joe’s Jeans (Nasdaq: JOEZ) posted double-digit revenue growth this past quarter. If a trend is hot enough, it defies the math of discretionary income.
Ciena (Nasdaq: CIEN) is also ahead of the pros. The telco networking specialist posted an adjusted quarterly loss of $0.09 a share. This may be roughly double the red ink that Ciena sported a year earlier, but Wall Street was targeting a deficit of $0.33 a share, making this loss a relative victory.
Finally, Shuffle Master (NYSE: SHFL) investors like the hand they’re being dealt. The maker of automatic cash shufflers and other casino equipment earned $0.13 a share on an adjusted basis, ahead of both the $0.10 a share it posted a year ago, and the $0.12 a share that analysts were expecting.
The gaming industry took its lumps during the recession, but casino operator Las Vegas Sands (NYSE: LVS) has hit fresh 52-week highs in recent weeks, while Wynn Resorts(Nasdaq: WYNN) has come within a penny of doing so.
These picks all have shown legs because weak in the knew consumer demand isn’t holding them back. Finding these kinds of plays is what will make the difference between a smart well constructed lineup vs. also ran dogs that play into the recession narrative.