Two Small Cap Restaurant Stocks Gain +30%

Stocks are trying to gain footing this afternoon after a larger-than-expected drop in home sales doused investor hopes that the economy was beginning to recover.

At 2:11 pm ET, the Russell 2000 (NYSE:IWM) is down 1.77% at 462.37, while the Dow is down 0.10% at 7,878.76 and the S&P 500 is down 0.06% at 843.04.

Stronger-than-expected earnings from benchmark Apple (Nasdaq:APPL) were unable to outshine the mood set by poor housing data released today. The National Association of Realtors reported this morning that sales of existing homes dropped 3% to an annual rate of 4.57 million last month.

Despite the bad news, certain small caps are still flying high today. Carrols Restaurant Group (Nasdaq:TAST) is up a whopping 35% after the company beat estimates, while another restaurant small-cap, Famous Dave’s of America, Inc. (Nasdaq:DAVE), is up 30% after seeing a Q1 profit jump.

*****As you know, we are watching oil prices as a measure of economic health. Today, it’s reported that March existing home sales fell by a bigger than expected 3%. And new claims for unemployment benefits rose a bit more than expected.

Consequently, oil prices remain below $50 a barrel.

Conoco-Phillips (NYSE:COP) reported an 80% drop in year-over-year profits for the first quarter. The stock is up because the company still managed to beat earnings expectations.

One interesting note from COP: it’s capital expenditure budget has been cut 37%. That means the company is investing less to bring more supply on line. In the current environment, investing in oil supply is not as rewarding as it was a year ago when oil was trading at north of $100 a barrel. But with global CAPEX spending by oil companies down approximately 17% this year, this is an industry-wide trend that has dire consequences going forward.

*****The International Energy Agency (IEA) reports that as much as 2 million barrels a day of expected new oil supply production isn’t being completed due . . .

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