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Thursday, 03/27/08
Posted 03/28/08, 06:44
am ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Thursday, 03/27/08 |
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Dow Jones: |
12,302 |
- 120 |
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NASDAQ: |
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2,280 |
- 43 |
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S&P 500: |
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1,325 |
- 15 |
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Opening Segment 1
Title: |
'The Sell Block'
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. . . .
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Featured Stock(s): |
Liz Claiborne Inc. (LIZ)
Urban Outfitters (URBN)
See Opening Segment 2,
below...
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After this segment, you
can see Jim's Lightning
Round picks
here... |
JJC: In
tonight's Sell Block, I'm
going to teach you to
invest like the pros
invest... I'm going
to teach you how the pros
sell...
They like to buy one stock
of a company that's doing
well... Urban Outfitters (URBN)
and, at the same time,
sell the stock of another
company that's doing
badly...Liz Claiborne (LIZ).
This is called "pairs
trading"... and,
today, I'm going to show
you the ultimate pairs
trade. It's URBN
versus LIZ. If
you were a pro, you'd be
buying URBN right here...
It's on fire with a "hit
them where they ain't"...
It just opened three
stores in Brooklyn, where
the hipsters have
attitude... and LIZ,
which is being weighed
down by lousy same-store
sales, a string of
pre-announcements and,
yes, faltering brands...
. . . .
.
In a pairs trade, one
company has to be really
strong, and the other
really weak... and that's
exactly what we have in
these two retailers...
URBN's got three
divisions, all of which
are kicking butt and
taking names...
There's the original Urban
Outfitters for the 18-30
(year old) demo... which
is growing sales at 18%...
same-store sales up 6%...
And then there's
Anthropologie, which is
for women between 30 and
45... the second-largest
franchise, 18% growth,
incredible same-store
sales growth of 18%...
that means the same store
is selling 18% more goods
than the previous
(year)...
Finally, URBN has Free
People, for women in their
late 20s, although my
youngest daughter likes to
shop there. This is
an up-and-coming brand
growing sales at a
magnificent 30%, with 19%
same-store sales
increases...
URBN's direct-to-consumer
business from online and
magazine sales is also
growing sales at about
30%.
Everything this company
does seems to be
working...
Overall same-store sales
for the fourth quarter are
up 11% in a really
difficult environment.
Only
Costco (COST)
comes near this company,
in terms of those numbers.
The CEO of this company,
Glen Senk, has the best
merchandise eye in the
business, short of
J. Crew Group (JCG)'s
Mickey Drexler (their
CEO). Retailing,
despite what you may read
in the papers about volume
or the quality of
whatever, retail is about
one thing...
Successful retail is about
the eye... the bad
merchants have evil
ones...
. . . .
.
Now let's compare this to
the other half of the
pairs trade... the half
you sell... Liz Claiborne (LIZ),
whose CEO, a nice man,
comes from
Johnson & Johnson (JNJ)...
JNJ? The last I
looked, other than those
nifty Scooby-Doo
band-aids, they don't have
anything cool at all...
Baby powder? Not all
that stylish...
On February 14th, LIZ
pre-announced a total
disaster... 15-25 cents of
earnings per share for the
fourth quarter. Hey,
we were looking for 43
cents higher than that.
Their comps are
terrible... For the
fourth quarter, same-store
sales at Mexx, LIZ's
largest brand, down 3%...
Lucky Brands, their
2nd-largest, a 1%
decrease... Their
only strength was in Juicy
Couture, which reported a
25% increase in same-store
(sales), and that was only
because of my daughter's
concentrated buying...
But the rest of LIZ's
brands seem to be
flailing...
Now direct sales (i.e.,
through their stores)
aren't even where the big
problem is. Some of
those stores might be able
to be turned around...
The real problem is in
partnered brands, where
sales were down 28%
year-over-year for the
fourth quarter.
You're getting a great
chance to sell it again.
It's bounced back,
courtesy of that rally
that lifted all the
retailers... because a
rising tide lifts all
ships... even a sinking
one like LIZ... but I
don't think this one
should have gone up.
. . . .
.
LIZ is a company that's
losing ground. URBN
is a company that's taking
it, leaps and bounds...
LIZ is also hostage to one
of the great scourges of
all apparel,
Macy's
(M),
as well as other
department stores...
URBN stands on its own two
feet... or three feet, if
you think of the
divisions...
Macy's happens to be LIZ's
largest customer.
They represent 14% of
sales. LIZ's
hundred-largest customers
- most of which are
department stores - make
up 67% of sales in the
fourth quarter.
They're hostage...
These places are all
discounting like mad, in
order to make sales,
thanks to the
slowdown/recession, and
they're crushing LIZ in
the process...
. . . .
.
So, if you want to sell
like a pro, I say you
don't just sell LIZ -
which ran up in the
oversold rally and can,
therefore, be sold here...
I dont' recommend
shorting, but I know hedge
funds are short this...
it's too dangerous for my
viewers... or you
can buy URBN.
Sell LIZ. Buy URBN.
I think LIZ goes lower,
URBN goes higher...
There's your profit.
. . . .
.
The Bottom Line!:
Now you know how to trade
like a pro... you know how
to do a pairs trade...
You dump
Liz Claiborne Inc. (LIZ),
you buy
Urban Outfitters (URBN)!
. . . .
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Stock Snapshots - Includes
all stocks mentioned above |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
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LIZ |
19.55 |
18.50 |
Liz Claiborne Inc. (LIZ)
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URBN |
30.54 |
30.66 |
Urban Outfitters (URBN)
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See all of tonight's stocks'
latest quotes on
Yahoo! Finance |
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Most popular
investing books ordered:
(click any book to see at
Amazon.com) |
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Final Segment
2 Title: |
'Mad Mail'... |
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. . . .
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Featured
Stock(s): |
See comments below... |
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After this segment, you
can see Jim's
Sudden:Death picks
here... |
. . . .
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
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AKS |
52.68 |
53.69 |
Mad Mail
AK Steel Holding Corp. (AKS)
Q:
AKS has the
premier coating
line in the
world. It
is the domestic
leader in
stainless and
electrical
steel. Not
only do you
change your mind
like a woman,
you don't know
your steel
stocks!
JJC:
I could very
quickly deflect
that, and say
that that is
just a sexist
comment - which
it was - but I
would also add
that AKS is not
as cheap as
United States Steel Corp.
(X)...
but I agree with
you... I like
AKS very much.
Stainless
steel... be
careful.
Russia is
starting to
flood the market
with it.
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X |
121.52 |
123.84 |
Mad Mail
United States Steel Corp.
(X)
See AKS comments
above for:
X
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BBI |
3.45 |
3.49 |
Mad Mail
Canadian
National Railway
Company (CNI)
Q:
I watch Mad
Money daily.
I have been
trading stocks
since January
and I must say
thank you for
the
Blockbuster Inc.
(BBI)
recommendation.
Until I owned
that stock, I
didn't truly
understand the
trading around
stock price
changes.
BBI, if it goes
up even 10
cents, can make
you a pretty
penny if you
reinvest that
penny when the
price falls back
down. It's
beautiful.
Thanks Cramer!
JJC:
It's what I talk
about in the
book,
Real Money.
I totally agree
with you.
BBI has been a
good speculative
recommendation
of ours.
It's gone up
nicely and I
would stick with
it, and trade
around.
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SIRI |
2.83 |
2.86 |
Mad Mail
Sirius Satellite Radio
Inc. (SIRI)
Q:
I bought a
thousand shares
of SIRI stock a
year ago at
around $2.80 per
share. I
bought the stock
because I like
Howard Stern...
There you have
it, "my secret
strategy,"
Howard Stern =
sound
investment.
Now please Jim,
how is it that
the larger of
these two
companies,
XM Satellite Radio (XMSR),
is being
swallowed by the
less valuable
one, SIRI?
JJC:
It is a merger
together.
SIRI made the
proposal.
SIRI has got the
management team.
I believe, by
the way, that
this stock is
way undervalued.
I see a lot of
people worried
that the FCC is
not going to do
it. People
have to
understand that,
when you have
one car company
putting one
system in, and
another car
company putting
in another, then
you're not going
to make money.
But, if all 16
million cars
have Sirius and
XM in them
together, that
company's going
to make a ton of
money...
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[
end of final segment ]
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Go to the SUDDEN:DEATH
SEGMENT from
tonight's show
here >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >> |
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Symbol keys: |
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A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
of stocks
here >> |
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Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself. |
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Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself. |
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Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point. |
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Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about. |
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Definitions of key phrases
used by Jim, known as
"Cramerisms": |
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Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back... |
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Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you. |
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Definition: 'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock). |
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Definition: 'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point. |
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See more
"Cramerisms" & other
financial phrases
here >> |
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Helpful Websites: |
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See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
jim-cramer-charitable-trust-stocks.com |
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See the stocks currently
known to be in Warren
Buffett's portfolio
of
stocks at:
warren-buffett-portfolio.com |
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Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
StockHomework101.com
This site is coming soon.
Thank you. |
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FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
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Jim Cramer's past comments
about those stocks.
Fast Money Recap - Trades
for next day...
Compare these picks to Jim's
comments for the same
stocks. |
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