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Tough to believe it's been more than a year since the coronavirus flipped life upside-down, but here we are.
But as hard as these 12 months have been, we're already starting to see signs that we might be turning the corner on this thing. The CDC says 107 million Americans have had at least one of the new shots, and the president just went on national television to say we could very well have a "more normal" Fourth of July.
Hey – I'll take it.
This is having impacts across the economy and the stock market, too.
Sure, we're seeing a surge in "recovery stocks," like energy and cyclicals – not all that surprising.
And we're seeing some of the stocks that tore it up during the worst of the pandemic, like Zoom Video Communications Inc. (NASDAQ: ZM), hit the skids; Zoom is down more than $226 from its October 2020 all-time high.
There's another breed of company, though, that's really tailor-made for profitable trading right now because it had really strong pandemic performance – and it's still going strong with the recovery.
The Money Calendar and I have picked out two of these "sweet spot" stocks to trade for big profits before Memorial Day…
Big Restaurants Are Throwing Off Big Profits Right Now
A lot of national and regional chains were in deep trouble in March 2020. I'm talking death row. As the pandemic got into full swing and states locked down, these folks were looking at double-digit or more collapses in revenue, profits, volume, foot traffic – you name it.
Think of nearly every important metric that goes into valuing a stock, and it was all pointing downhill.
23 WINS, ZERO LOSSES since April 2020 – see how Tom accomplished this incredible year right here…
But, like the saying goes, "Adapt or die." And that's exactly what these companies did. They did it fast, too – rolled up their sleeves and solved the problems of revenue and volume. The solution was simple but effective; they made the successful switch to online ordering, touchless curbside pickup, and delivery.
Along the way, a lot of these places pared down their menu offerings and simplified things to make kitchens easier to run in a pandemic and work for people who were ordering remotely. One CEO even went without a salary for a few months to keep as many employees as possible on hand to make the conversion to "remote" dining.
And at the end of the day, these companies were coming up with a whole new business model, pretty much from scratch, in a completely transformed world, in as little time as possible.
And what can I say? It worked.
Now that I can get my favorite burger fix at the press of a button… and a 45-minute wait… it's tough to imagine life any other way.
But over the warmer months, when the pandemic restrictions eased off a bit, these restaurants were able to increase in-house traffic again and keep up with their new revenue channels. Plus, now that restrictions are, in at least a few places, off the table (for as long as case numbers keep heading in the right direction, at least), business is booming online and in line.
Restaurant analysts are discovering that, as people come back into dining rooms whenever possible, they're looking for trust and familiarity or, in other words, normality and the "way things used to be."
The chains that pulled all this off managed to grow stock prices by several hundred percent from last March to now.
Let me run through two of them and then show you what to do.
Here Are the Restaurant Stocks to Trade This Week
Darden Restaurants Inc. (NYSE: DRI) sank to $26.15 on March 18, 2020, and it just hit an all-time high north of $141.
Darden owns two fine dining restaurants, The Capital Grille and Eddie V's Prime Seafood, but its six casual dining outfits are its bread and butter – Olive Garden and Longhorn Steakhouse are two of its biggest, and it used to own Red Lobster. These folks are the biggest full-service restaurant operators on Earth.
As far back as June, restaurant industry insiders thought Darden and Chipotle could not only survive but grow during the pandemic, and that's just what happened. Darden's management and team really put on the hustle, and the stock is up more than 439% to show for it.
RELATED: This winning strategy helped Tom pull together his most successful year yet since April 2020. He shattered every record, delivering 23 wins and ZERO losses. Here's how…
Chipotle Mexican Grill Inc. (NYSE: CMG) is the second stock I'm impressed with right now. Chipotle's been through crises before, namely an e. coli outbreak in the last decade, and it came through stronger.
Just like everyone else, Chipotle had to shut dining rooms, reshuffle menus, and re-task employees. It invested in state-of-the-art air purification and circulation wherever customers would come in to pick up food from the contactless pick-up system.
Now that people are starting to return to dining rooms, corporate has put dedicated clean up staff – "room stewards" – in its locations, along with lots of hand sanitizer.
The stock has rewarded investors with high after high, and it's just off an all-time high of $1,564.91
Now, you could certainly buy these stocks outright, and I'd bet you'd probably do just fine, at least in the intermediate-term; it's tough to say that these stocks are perfectly valued, given the high, frothy kind of markets we're seeing right now.
What I mean is, in the long term, there could be some risk here – not that I expect it anytime soon.
Besides, 100 shares of DRI would cost you almost $15 grand right now.
Trading is definitely the way to go here, with call options expiring in 30 to 60 days. You can make a lot of money if these stocks keep building on their strong performance, and I don't see why they wouldn't. You could buy DRI April 16, 2021 $150 calls for $3.31 each right now, or $331 for 100. CMG April 16 $1,510 calls are going for $47.84, or under $5,000 for 100 – which sounds like a lot until you remember that buying those shares outright is nearly $150,000.
Neither of these stocks has to move very far very fast in order for you to pocket some extra cash. Maybe treat yourself to a dinner when you sell?
These restaurants are great right now, but there are a couple of ways it's possible to use certain kinds of options to potentially pull off a "shopping list" of stocks. Usually, when a trader buys calls, they're bullish, expecting the stock to go up. But when put options are sold, the seller is usually also bullish on the stock, looking to seize the potential to own it on the cheap.
Think about this theoretical scenario: A put seller could possibly end up owning a great $50 stock for $35 a share, maybe even less, in pretty much any kind of market conditions. If that's not enough, it's also possible to bank fast income from the premium. I recently used a similar strategy to set myself up for my most successful year yet – 23 wins, ZERO losses since April 2020. Let me fill you in on the details…
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.