The broader market has resolved its range to the upside led by several groups, among them Consumer Discretionary, which is hitting all-time highs on an absolute basis and also relative to the Consumer Staples sector. Within that group, the Restaurant industry continues to deliver strong returns. An example is Texas Roadhouse up 20% YTD on top of an already massive ~ 1300% gain from its 2008 lows.
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To show how broad-based this rally's been, I want to highlight two stocks on the opposite ends of the spectrum, Denny's, the breakfast chain, and RCI Hospitality Holdings, the owner/operator of nightclubs.
Denny's has been in a strong uptrend since breaking out in late 2013 and broke out again earlier this year after consolidating for the majority of 2015-2017. Now that prices are retesting the breakout level, we want to be buyers of this weakness and look to take profits up toward 22.50. With that said, if prices break below 13.80 a more neutral approach is best.
RCI Hospitality Holdings Inc. is a smaller-cap name, but the point here is that it's part of the higher-end discretionary space and is also breaking out to new all-time highs after spending the last 10-years making no upward progress. As long as prices are above the 2008 closing highs of 28.50 the bias in this stock remains to the upside with a price target at 46.90.
The theme here is that whether you're interested in $4.99 pancakes or $499 bottles, both stocks are just off all-time highs and look poised for further gains. This shows strong participation within the Restaurant industry of the Consumer Discretionary sector.
Here is a list of the rest of the stocks we want to buy:
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