After this segment, you
can see Jim's
SUDDEN:DEATH picks
here >>
We're doing a jail
break...
In tonight's Sell Block,
we're springing
Coach Inc. (COH)...
a stock that I wrongfully
imprisoned... a stock
where I whiffed... I blew
this one big time...
I stayed too negative on
COH...
So, tonight, I'm going to
explain how I screwed
up... to show you what I
did wrong. I don't want
you to repeat my mistakes,
somewhere down the line...
. . . .
.
What did I do wrong?...
For starters, I let the
media coverage... the
media was talking about a
disappointing quarter...
talking about how COH was
stuck with too much
inventory... I let them
control it... that was the
rap from the media, and I
gave it too much credence,
when the reality was quite
different...
In truth, the inventory in
question that was supposed
to be building, didn't
even exist... it was just
book accounting... it had
to do with the yen
appreciating as opposed to
the dollar, since COH does
a lot of business in
Japan... It made it look
like the same inventory
was actually larger and
more swelled... because it
was worth more, due to the
higher yen... Most people
didn't even understand
it... It looked like the
inventory had gone up big
but, if I had done the
homework myself, rather
than just listening to the
headlines of the media,
then I would have known
that the inventory had
basically stayed the same
and it was a non-issue...
. . . .
.
More importantly, though,
I made the huge and
unforgivable mistake of
not trusting Lew
Frankfort, COH's fabulous
CEO...
I didn't like the fact
that he was pursuing more
business in America, and
not overseas... Clearly,
Lew knew his business
better than I did... and
it looks like he was a
good bet...
To understand how wrong it
was for me to distrust
Lew, all we've got to do
is go back a year, when I
put together a list of
retail CEOs who deserve
the benefit of the
doubt... I used Lew
Frankfort as the
paradigmatic example of a
CEO, who's earned the
benefit of the doubt,
because he came on the
show, after his company
had missed the numbers,
and said it was a one-time
thing... He said he would
deliver and, if you
listened to him, you
caught a double in the
stock... So I knew Lew
deserved the benefit of
the doubt... but I
believed the press over
Lew... I didn't give him
any due...
If you read the conference
call... the stock was
under $30 at the time...
it was like no one
believed the guy at all,
and I was part of that
miserable, stupid
chorus... I saw that COH
was innovating with lots
of new products, but I
figured it didn't matter,
because they had the big
inventories... foolishly
failing to realize that
the inventories weren't
high at all...
I was just so blind,
buying into the "Coach is
dead" thesis, "high-end is
dead" thesis... that I
falsely imprisoned Lew and
his great company...
I'm
pants-ing myself, and I'm wearing the COH post-it...
That's a daily double...
. . . .
.
Now that we've sprung COH
from the Sell Block, and
explained my whiff, let's
talk about why you might
want to own this stock
right now, okay...
COH is still growing its
sales, even with all the
sound and fury of the
recession... the demise of
the American economy...
COH is able to grow its
sales beautifully!... And
earnings per share... 19%
clip in the most recent
quarter, even in this
crummy environment... 15x
earnings for Lew!...
COH's fiscal year ends in
June... a long-term growth
rate of 18.3%...
criminally cheap! Like
you're stealing a Coach
purse...
. . . .
.
Lew has been aggressively
buying back his stock,
okay... In the latest
quarter, COH repurchased
$327 million worth of
shares, at an average
price of $28 bucks... When
this company buys back
stock, you can see its
good value... COH spent
half of its repurchase
authorization, just in the
last quarter... I think
this is Lew demonstrating
how bullish he is on his
own stock, in the best way
possible... in the open
market with cold hard
cash!...
Since COH has bought back
so many shares - the
company only has $333
million left in its
buyback, which was just
authorized in early
November - I smell another
buyback coming soon.
. . . .
.
COH is increasing its
distribution in North
America and Japan... It's
also raising brand
awareness in emerging
markets, like China...
Those newly-minted
capitalists would surely
fall all over themselves
to buy a Coach accessory,
to show off their wealth,
as conspicuous consumption
is the beating heart of
capitalism... and nobody
does capitalism better
than the communist
Chinese!...
Who knows? Maybe they'll
stop counterfeiting Coach
bags - a favorite
ChiComm pastime - and
just buy the real ones..
Lew has said that he
expects COH's business in
China to grow - and I
quote him, "extremely
rapidly..." saying that it
has the potential to
become a third leg for
COH... that, after Japan
and North America...
I'm telling you, I like
this story... and I don't
like retail, all right...
I don't like retail...
The Street's expectation
for this one is still very
low...
You've got the
$600-Coach-handbag-on-every-arm
stimulus rebate coming out
very soon... You've got
the great buyback, you've
got the Chinese growth...
Hey listen, if this one
pulls back - because,
again, I don't like retail
- COH is good...
. . . .
.
The Bottom Line!:
I wrongly imprisoned
Coach Inc. (COH)
in the Sell Block, and
missed a big move higher.
That was a huge whiff...
And now I think it's time
to spring COH from the
Sell Block and, a little
bit lower (in price),
start buying...
. . . .
.
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After this segment, you
can see Jim's
SUDDEN:DEATH picks
here >>
Jim's Comments BEFORE
the interview:
This is not like any other
show... I don't like to
bring CEOs on... You
need to recognize that,
when I bring on a CEO, I
don't pick guys at
random... I pick my
guys... I pick guys that I
think can help you...
I never bring people on
idly... Tonight, we've got
Peter McCausland, chairman
and CEO of
Airgas Inc. (ARG).
He's been on the show six
times before, and there
are reasons for that.
I knew that his company,
and he, could make you a
lot of money... The
second reason is that this
show is the only court of
appeals from the brokerage
industry in the whole
world... When a
stock gets hit with shoddy
analyst work, or the
analysts get it wrong, as
I felt was happening with
Foster Wheeler (FWLT*)
the other day... as
I felt with
Yamana Gold Inc.
(AUY*)...
another one I have in
my charitable trust... As
ARG did, when Deutsche
Bank downgraded it, back
in March... I
thought that was a
travesty. They
knocked the stock down
from $46 to $42...
so I appealed to Peter
McCausland. I said,
come on, explain the
story, correct the mistake
in views that were
articulated back on March
17th...
Now look... that stock was
at $42 bucks... It
is at $57.85 now, and he
said the company was doing
well. Now, you know
he had been on the show a
lot. I wasn't just
going to sit there and
have him say it would do
well, if it wasn't...
He wouldn't come on...
ARG subsequently reported
another great quarter
yesterday, beating by 3
cents, and giving out
great guidance. The
stock is now up - are you
ready for this - 86% since
the first time McCausland
appeared on the show...
It's up 36% since just the
last time...
With that stage set, it's
time to bring the man who
pulled this off, becoming
the undisputed title
holder of Most Frequent
Mad Money Guest... I'm
proud of that, given the
performance, with seven
visits... Peter
McCausland... Peter,
welcome back to Mad
Money...
. . . .
.
Jim's Comments AFTER
the interview:
I
don't have these (CEOs) on
idly... This man's been on
seven times, because I
thought he'd make you
money and he has.
You've got an over 80%
gain... and I'm sticking
with ARG.
. . . .
.
■
Stock Snapshots - Includes
all stocks mentioned above
■
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)
Go to the SUDDEN:DEATH
SEGMENT from
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Jim mentioned it is a stock
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think it is indicated by his
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Please read his comments to
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Thumbs down -
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We do our best to interpret
Jim's opinion on stocks, as
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his comments during the
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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.
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.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
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...
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.
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).
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.
See more
"Cramerisms" & other
financial phrases
here >>
Helpful Websites:
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Charitable Trust at:
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...
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,
to compare their picks to
Jim Cramer's past comments
about those stocks.
