As part of our recent Specialty Retail Report we spoke with Betty Chen, Vice President and Senior Equity Research Analyst at Wedbush Morgan Securities Inc. She believe the younger demographic is where the growth is ,

Ms. Chen: We are advising investors to look at the younger demographic. Children’s and teen retailers continue to enjoy favorable demographics, with birth rates increasing 3% to 5% over the past several years, and on top of that, kids and teens continue to grow. So there is more of a natural replenishment versus adult. So those are the two areas. And then also, teens continue to find going to malls a social event. So those are probably the areas that we will focus on.

She also offered up some names that seem to be taking advantage of the younger demographic

Ms. Chen: I think in the children’s space we prefer Gymboree (GYMB). We believe they are positioned very well, managing expenses very strategically and using promotions to drive traffic in earnings. In addition to that, we will look at Aeropostale (ARO), which is a teen retailer with very compelling price points and improving fashion and brand positioning; it obviously has done very well in gaining market share throughout 2008.

Youth is where the growth is literally and investment wise

In our recent Restaurants Roundtable Bryan C. Elliott of  Raymond James put forth this take on the restaurants sector

Mr. Elliott: I have characterized it in print as a compelling, once-in-a-generation long-term investment opportunity. You have stocks that are clearly going to survive and are selling at fractions of any reasonable level of multiples of revenue that you would see in a normal environment. When we get back to that normal environment, which we will, although I don’t know if I’ll live to see it, being the oldest of the group here, but we will get back to a normal environment at some time. So it’s truly a once-in-a-generation kind of opportunity, but that opportunity seems likely to exist for a while longer.

Stocks that survive will have 5 to 10 times recovery potential according to Mr. Elliott .

The sector may be down but it will survive and the companies that do survive will recover. Buy low sell high isn’t that what we all wait for ?

Barron‘s recently put out its annual list of the 30 most respected CEOs worldwide.  This year’s list saw a number of changes from the previous year both in terms of additions and deletions.  Many of the names that left the list saw their career fortunes take a turn for the worse, e.g., Sir Fred Goodwin of The Royal Bank of Scotland and Jeffrey Immelt of General Electric.  The list is fun reading.

As public rage begins to boil over with regard to taxpayer financed bonuses and the level of CEO salaries, particularly in the finance-related sectors,  CEOs outside the finance related sectoir are beginning to take heed.  Just today, Philip Boroff wrote a piece for Bloomberg discussing William F. Ruprecht, the CEO of Sotheby’ s.  According to the story,

(Ruprecht) agreed to a 14 percent pay cut and the elimination of his cash bonus after profit plunged and the auction house fired workers.

Ruprecht asked the board to cut his $700,000 base salary by $100,000, or 14 percent, according to a statement the New York- based company filed to the Securities and Exchange Commission yesterday. The auction house also removed his cash bonus for 2008, which was $2.6 million in 2007.

Boroff went on to discuss other high level CEOs, Glenn Murphy of the GAP, Inc. and Craig Dubow of Gannett who have already agreed to a cut in their compensation.  While these examples are far from a trend they may represent a shift in thinking on the parts of corporate boards and even CEOs who must face shareholders and the public during this difficult economic time period.   We will just have to see what transpires with regard tyo compensation for top executives over the next six to nine months.  Stay tuned.

For more:

TribLive

ZDnet

Portfolio.com 

Business Week ManagementIQ

Globe and Mail

In our March 23rd issue, we focused on Specialty Retail, and how a variety of niche markets are doing in this turbulent economic climate. Linda Tsai of MKM Partners LLC covers Teen & Children’s Clothing retailers. Ms. Tsai has just a single buy rating in this space: Aeropostale (ARO). We asked her why:

Ms. Tsai: Relative to their history, they’ve improved their merchandising and they still continue to improve it. They have gained share successfully at the expense of higher-priced teen retailers like American Eagle, Abercrombie and Pacific Sunwear. This is especially apparent in Aeropostale’s women’s business, which has comped very positively over the past year and a half, more or less.

We also asked Ms. Tsai which companies she felt investors should be particularly wary of in this environment. On the flip side, Ms. Tsai cautions against Pacific Sunwear (PSUN):

Ms. Tsai: Pacific Sunwear is one that I’ve been a bit worried about. That’s a company where they have had some inventory management issues in terms of having too much and being overly skewed. I don’t think they’ve well-articulated a clear strategy to solve some of their problems. They seem to have taken a scattershot approach in terms of how they are trying to fix their merchandising problems. So that’s probably one that I would stay away from right now.

For the complete Specialty Retail report, including a full interview with Ms. Tsai and interviews with analyst covering a variety of areas of this space, click here.

We have just published the2009 Wall Street Transcript Restaurants Report.

Our Roundtable discussion this week focuses on restaurants – and the restaurant operators are clearly in preservation mode. Casual dining has been seeing an exit of customers for a couple of years, but while demand will likely continue its decline in 2009, so will supply. According to Stephen Anderson of MKM Partners LLC one specific category is in danger,

Mr. Anderson: The bar and grill is most at risk of a shakeout, because this is the group that grew by about 6% or 7% in the decade prior to 2007. It’s only now that growth in the segment has dwindled down to about a 1% to 1.5% rate. This suggests to us that there has been overbuilding in that segment and there’s going to be some kind of thinning out process that will need to happen. I think maybe even entire chains may disappear altogether.

Restaurants will be able to control what they can control, but for any kind of full recovery, it will depend on external macro factors.

This is  a great time to be getting a read on this segment of the consumer market.  And the roundtable really highlights the issues these companies are having – and contrast them with the fortunes of the fast food chains.

We recently spoke with Dr. John Cormier of Picomole where we discussed the company’s technology and future plans

Dr. Cormier: There is really nothing like LifeSens out there. Our portable instrument is easy to move around, it    plugs into an ordinary electrical wall socket. Breath sampling is very patient friendly, there is absolutely no pain, discomfort or embarrassment to the patient whatsoever and the results can be generated within minutes… It’s about taking lab quality tests and bringing them right to the patient or bedside in a way that’s cost effective and easy to use for front-line healthcare workers who might not know much about gas analysis technology, but know how to collect a breath sample properly. Those are all attributes that I think make this a unique proposition.

Quick breath test and no pain sounds like a technology we can all embrace.

To read the full interview with Dr. Cormier click here 

As part of our Invest Northwest issue, this week TWST interviewed Richard Rylander of Enject, Inc.

Enject is a company that was incorporated for the purpose of developing auto-injector pen systems for the delivery of emergency glucose to diabetic patients in emergency situations.

The companies latest effort is a device called the Glucapen. Mr. Rylander tells us a little about it:

Mr. Rylander: Given the emergency nature of the situation, the third-party is under a high degree of stress and pressure to act fast. There are a number of mistakes that can (and do) occur that have garnered a large number of complaints from medical professionals as well as caregivers. These include dropped materials, broken needles, secondary needle sticks, and a host of other issues. Our solution is to put all of the components into a pen device that has a concealed needle. It’s a one-time-use disposable, and requires only two clicks to activate and administer the injection. We call our product GlucaPen.

Click here for the full Invest Northwest report, including a complete interview with Mr. Rylander as well a host of other top CEOs in the biotech space, click here.

In his interview with TWST portfolio manager Kendall Anderson of Anderson Griggs Portfolio Management stressed common sense in the face of fears triggered by the current recession. Mr. Anderson went on to tell us about two stocks in particular that are, in fact, benefitting from the current climate. These are what Mr. Anderson calls “special situation” stocks:

• DIRECTTV (DTV)-  “People say that they drink more when times are tough. Well, I think they are staying home to have their drink in front of the TV. DIRECTV is a prime provider of that service and it has been reflected in its growth rate. This company is in the right place at the right time with the right product, which is our description of a special situation.”
• Monsato (MON)- “Another special situation is Monsanto…If you think about what’s been going on in this nation over the last 100 years, you can see that what used to take 95% of the population working as farmers to feed us can now be done with only 2% of the population farming. Monsanto is one of the companies that we can thank for that. Yet if you listen to too many non-farmers, or read some of the blogs, you will find people who will tell you that Monsanto is terrible because they are genetically altering genes. The fact is, they are creating huge amounts of increased yield to feed many more people around the world. Although the stock price is off 20% or 30%, their future as a business is very bright. As long as we have growing populations and more people moving from the farms to the big cities, we are going to need more food from fewer farmers and Monsanto and their shareholders will be rewarded.”

For the complete Investing Strategies Report, including interviews with a variety of portfolio managers and a full interview with Mr. Anderson giving his outlook for the immediate future and more stock picks, click here.

This week The Wall Street Transcript offers exclusive coverage of Invest Northwest 2009, the region’s premier life sciences investment conference.

If you were unable to make your way to Seattle for the conference  TWST has Interviews with 28 of the presenting companies available now to subscribers.