The government has decided to shut down, and investors and the public are trying to figure out what all of this really means. Is this good politics or bad? Is it good for economy or bad? Many businesses and industries will suffer from the shutdown, but a government shutdown may actually bring at least some good news to some companies.
Imagine trying to profit off of all those newly furloughed workers who know that their “staycation” will likely be temporary. This is where you have to be extremely careful on evaluating which companies win and lose in consumer spending and in low-cost or affordable entertainment.
24/7 Wall St. has decided to take a look at several companies which would do well or would not be affected by any measure under a government shutdown. The trick is to decide which companies would actually benefit from some 800,000 people not going to work each day by profiteering from all of this new temporary free time during the day.
Some of these beneficiaries will seem a bit funny on the surface, but the reality is that this is serious business for these few companies. Many or most business segments will suffer from a government shutdown, and often for different reasons or logic than some might be willing to consider.
We would be quick to point out that these 800,000 or so workers will have to be frugal during this new time off. They do not have any clue about how long a shutdown may last. Their kids will still have to go to school during the day and these people will almost certainly be doing something with their newly found free time.
The first two names that pop right into the mind as beneficiaries are Altria Group Inc. (NYSE: MO) and Reynolds American Inc. (NYSE: RAI). Think Marlboro and Camel. Cigarettes are defensive by nature for investors, and now you could argue that there might even be a slight uptick in cigarette consumption during a government shutdown. You know how you see all of those workers “on a smoke break” outside government and private sector office buildings? Now all those furloughed government workers can smoke several times more, or as many more times as the wish, each day at home or at a friend’s house without a manager monitoring their smoke breaks.
Anheuser-Busch InBev (NYSE: BUD) is supposed to be the king of beer, and there are now going to be another 800,000 workers either sitting at home or over at a co-worker’s house with a lot more free time on their hands. What will people do when their kids are at school with new-found free time on their hands? If it was January they might go hit the gym. In October, they might decide to down a few extra six-packs. After all, a 6-pack or 12-pack of beer is generally cheaper than wine and booze.