A couple of weeks ago, my son told me about an episode of “South Park,” where the character Cartman was roped into a vegan diet by his girlfriend.

He comes up with a brilliant idea to tell her he discovered a vegan version of Kentucky Fried Chicken: “Beyond” KFC. 

I thought about this yesterday, as shares of Blue Apron (APRN) raced 80% higher on the news they would start using Beyond Meat (BYND) products.

The stock settled down to +36% by the closing bell, but that spike was mind-boggling. There is no doubt the growing ‘healthy living and eating’ movement that includes veganism and organic food is sweeping the nation. However, I think the move in Blue Apron spoke to something beyond healthy eating.

The spurt higher underscores a growing appetite among the increasing pool of would-be stock market bottom-fishers seeking value. For some, the word “value” means depressed and underperforming. For me, however, it’s about stocks that have unrealized potential held back by several possible issues, including the history of poor management execution.

Don’t Blink

What’s remarkable with the stock market is how quickly real value ideas can spurt higher. Consider that in the past year, Delta Airlines (DAL) and Walmart (WMT) struggled with several experts telling investors to avoid them.

They are now changing hands at all-time highs. It happens in the blink of an eye.

I got nervous and issued an alert, saying we are taking profits in the model portfolio on Cintas (CTAS), one of my favorite and proxy for the working men and women in America because of increased volatility. This morning, the stock is going to open substantially higher. What Delta, Walmart, and Cintas all have in common is their businesses are growing organically.

They are great American businesses that have stumbled from time to time and saw exaggerated selling in their underlying shares. The Wall Street reactions are almost always overdone. Once stocks stumble, they become vulnerable until they stop dropping and investors tend to stop paying attention.

Value is in the eyes of the beholder, I guess, but it doesn’t mean taking exaggerated risks. Buying shares in great, proven companies seem boring, and they don’t pop 35% in a day – but give them more time.

Rally Takes a Break

Yesterday, market breadth was more bearish than the print of major indices at the close, but the value theme ruled. Material and Industrials led the way, and after the close, United Airlines (UAL) posted strong results. It’s consolidation time in general, but there is a lot of money out there eager to catch up. 

Symbol	Select Sector SPDR Fund	Last	Change	% Change
XLC	Communication Services	51.13	-0.12	-0.23
XLY	Consumer Discretionary	124.32	-0.16	-0.13
XLP	Consumer Staples	59.99	+0.02	+0.03
XLE	Energy	63.18	-0.68	-1.06
XLF	Financials	28.09	-0.07	-0.25
XLV	Health Care	92.18	-0.46	-0.50
XLI	Industrials	78.57	+0.50	+0.64
XLB	Materials	58.55	+0.14	+0.24
XLRE	Real Estate	37.61	-0.06	-0.16
XLK	Technology	80.65	-0.76	-0.93
XLU	Utilities	60.50	-0.35	-0.58

Portfolio Approach

Communication Services	Consumer Discretionary	Consumer Staples
1	4	1
Energy	Financials	Healthcare
1	2	1
Industrial	Materials	Real Estate
2	3	1
Technology	Utilities	Cash
3	0	1

Today’s Session

The major indices are slightly lower this morning.  The latest housing data show declines in starts and permits in June. Single family home supply remains constrained and an issue for the overall housing market.  Units under construction were 1.135 million for June, and 1.29 for the second half of the year, which is 1.7% below the first quarter average and a negative for the Q2 GDP forecasts.

Housing Starts

• Down 0.9% m/m to a rate of 1.253 million units.  Single family was up 3.5% m/m while multi family decline 9.4% m/m.  Overall, single family starts have decline 0.8% y/y.
• Single-family starts in June were down 6.1% in the Northeast, up 8.0% in the Midwest, up 1.1% in the South, and up 9.8% in the West.

Permits

• Building permits dropped 6.1% m/m, of which single family permits were up 0.4% m/m, while multi family dropped 16.8% m/m and a 20.7% drop in units with 5 or more.
• Single family permits were down 4.7% y/y.

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