Here we are in Morton's (Steakhouse) in New York City - a central player in the power dining scene. And that's important. Nearly 80% of their business comes from expense accounts. In other words, your broker and lawyer are blowing off steam at your expense. So it’s great derivative play on the global boom.
As we know, beef prices have skyrocketed as soft “ag” prices have been ripping. Prices for a prime like this strip right here have gone up by nearly 30% in the last year.
For lesser steak houses that rely on individuals to foot the bill, that would be a problem. But Morton's can easily pass along prices to its wealthy customers.
After his report, Jeff Macke tells the panel that the two big players in this space are Morton’s (MRT) and Ruth’s Chris (RUTH); and both report earning's next week.
He recommends getting long Morton's for a number of reasons including the fact that Morton’s is hedged at 5% gains on their prime – and that’s the highest cost they have.
To sum it up, Jeff says Morton’s is best in breed, the Tiffany’s of steakhouses.