Trading Pizza in Turbulent Markets

09/24/2008 12:00 am EST


John Jagerson

Co-Founder and Contributor,

During times of market turmoil when we see the major stock indexes losing value, our natural tendency is to assume that all stocks are going down. After all, we say to ourselves, if the major indexes are going down, doesn't that mean that all stocks are going down? The answer is NO.

Just because we see market volatility, and economic uncertainty, just because we see negative headlines plastered across our newspapers, TV screens and computer monitors, and just because we see major stock indexes losing value does not mean that all stocks are going down.

In fact, in the midst of all of this market turmoil, we are actually seeing some stocks reach new 52-week highs. Some are even at all-time highs.

Two companies that seem to be thriving in these market conditions, as evidenced by their recent rise to new 52-week highs, are Papa John's International, Inc. (PZZA) and National Beverage Corp. (FIZZ)—the purveyors of Shasta soft drinks, and Rip It energy drinks. Apparently, during times of financial and economic crisis, people like to soothe their fears and anxiety with fantastically good pizza and then wash it down with cheap soda.

Pizz Chart

Pizz Chart

Of course, not every stock that is currently reaching new 52-week highs represents a food or beverage company. Here is a list of just a few of the other stocks that are doing quite well right now:

LeapFrog Enterprises (LF), a member of the consumer cyclical sector that designs, develops, and markets technology-based learning products and related content for the education of infants through grade school children at home, and in schools around the world.

Greif, Inc. (GEF), a member of the basic materials sector that produces industrial packaging products.

SAFECO Corporation (SAF), a member of the financial sector that provides property and casualty (P&C) insurance, along with related services to drivers, homeowners, and small and mid-sized businesses.

Raven Industries, Inc. (RAVN), a member of the technology sector that produces diverse products from military parachutes to reinforced plastic sheeting.

You see, the important thing we always have to remember as stock investors is that this is a wildly diverse market that represents a diverse economy. At any given time, you are going to have sectors of the economy—and thus sectors of the stock market—that are doing well, and sectors of the economy that are not doing well. Of course, at times like these, there are more sectors that are doing poorly than are doing well, but there are still those sectors that are surviving and thriving. Just look at the various sectors represented by the stocks listed above. Our job as investors is to identify those sectors, and the stocks within those sectors, and invest in them.

One great way to find stocks that are doing well in any market condition is to run a search, or stock screen, for those stocks that are reaching new 52-week highs. While reaching a new 52-week high is certainly no guarantee that the stock will continue to rise in the future, it is a great indication of current strength because you know market participants believe enough in the stock to put their money behind it. After all, investors give lip service to a lot of stocks and companies, but they only vote with their wallets on those stocks and companies they really believe in.

By John Jagerson, of and

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