3. Restaurant stocks will struggle. I've been a restaurant bull for much of the past four years but am concerned about the sector in 2013. Rising commodity costs -- if you buy that presumption -- will force margins lower and/or increase menu prices to consumers. The question is whether consumers will be willing to pay up. They'll still eat out -- that's what Americans do -- but perhaps not as much. The specter of the full implementation of the "Affordable" Care Act in 2014 may also weigh heavily, although some companies, such as Darden Restaurants (DRI), are finding ways to limit coverage by moving more workers to part-time status.
4. Farmland, timber, water, other tangible assets should do well. I continue to like agriculture, and have exposure through some small names such as Alico (ALCO) and Limoneira (LMNR). I closed out of a position in Argentine farming name Cresud (CRESY) but will be looking for a new entry point.
Timber has been an excellent asset class over the years, with a low correlations to stocks; investors can get exposure through Plum Creek Timber (PCL), Rayonier (RYN) and Weyerhauser (WT). Or, for broader exposure, there's the iShares S&P Global Timber & Forestry Index ETF (WOOD). For a combination land/water/agriculture play there's PICO Holdings (PICO), which has been disappointing in recent years, but owns an interesting array of assets.
That's it. Just four broad calls for 2013.I'll revisit these periodically and will likely take some lumps. At the time of publication, Heller was long ALCO, LMNR and PICO.
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