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Tuesday, 06/17/08
Posted 06/17/08, 08:47
pm ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Tuesday, 06/17/08 |
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Dow Jones: |
12,160 |
- 108 |
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NASDAQ: |
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2,457 |
- 17 |
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S&P 500: |
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1,350 |
- 9 |
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Final Segment
1
Title: |
'Ax And You Shall
Receive' |
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. . . .
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Featured Stock(s): |
Research
In Motion (RIMM)
See RIMM's official
website
here.
See the Yahoo!
Finance profile for
RIMM
here.
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After this segment, you
can see Jim's
Sudden:Death picks
here... |
JJC: How on
earth did
Research
In Motion (RIMM)
go up 7 points
yesterday?... and pull the
rest of the Nasdaq up, off
of RIMM's pin action, in
what otherwise looked like
a pretty much down day...
Let me give you a little
Wall Street inside
baseball... because this
is important... knowing
how and why stocks move is
vital knowledge for anyone
who wants to be a good
investor... and I'm about
to let you in on the
picture that you wouldn't
know, unless you worked on
a great hedge fund trading
desk...
To understand the anatomy
of this rally, you have to
be familiar with a concept
we have on the Street...
It's called "the Ax"...
Who or what is "the
Ax?"...
The Ax is the analyst
covering the stock, who
has the edge - thus the Ax
- over all the other
analysts... It's the guy
who knows the name better,
who has been right on the
stock's direction. It's
the guy who owns the
stock. And a guy by the
name of Rob Sanderson, at
American Technology
Research, is indeed the Ax
in RIMM... And Rob
Sanderson is the reason
for the rally yesterday.
Over the past months,
while other tech names
have stumbled, Sanderson
has been adamant about
RIMM... calling RIMM a
must-own stock and, so
far, this guy has been
completely and totally
right, which is how you
get to be the Ax...
The rest of the Street now
bows to his wisdom... and
how can you not?...
On a nasty day like today,
RIMM hits a 52-week
high... It did bounce
off... it finished up a
dollar and change... But,
again, that's the Ax
after-effect... the wake
of the Ax...
So yesterday, when the Ax
put out a note raising his
2009 earnings estimate for
RIMM, from $4.25 to $4.60
a share, and raised his
price target to $205, that
turned heads. Sanderson
went up to what's called
"Street High"... that's
another term you need to
know... meaning his
earnings-per-share
estimate was substantially
higher than everyone
else's. When the Ax goes
up to Street High, that
creates a powerful chain
reaction of other
analysts, looking to see
if their numbers are too
low... Because he's the
Ax, everyone else does
take up their estimates,
and you get kind of a
fantastic virtuous circle
up. He's got the edge, and
knows the stock better
than they do, and that
indicates an upside
surprise may be coming,
and the rest of the Street
may be underestimating the
power of the underlying
business of RIMM.
When the Ax comes out and
says - like Sanderson did
yesterday - that RIMM is
the best way for mobile
carriers to grow their
average revenues per
user... in other words,
the best way for the phone
companies to make money...
and that's called their
ARPU - the average revenue
per user... because
iPhones have been causing
bandwidth issues at
AT&T (T)
and because the Blackberry
is comparitively a better
ARPU generator for mobile
phone companies... people
listen.
Sanderson, after talking
to multiple money
managers, indicated that
RIMM is the best growth
story in tech... I say
hallelujah... and that
expectations for August
are too low. I say listen
to Sanderson...
Sanderson expects upside
guidance when RIMM reports
in August. But he told us
that investors who missed
the earlier move are
hoping for a pullback.
Too many people expect
this one to go down,
especially because of the
new
iPhone
launch. The Ax is telling
us, don't wait, it ain't
going to happen.
When the Ax says he thinks
RIMM's August guidance
will be better than
expected, because of
strength at
Verizon
(VZ*)
- RIMM's channel - over
AT&T (T)...
or because of the
acceleration of RIMM's
business in Europe, where
he expects the 9000 Series
Blackberry to start to
ramp in the August
quarter... and because
business with S could be
kicking in... What that
does is convince investors
around that Street that
this man, with such
credibility, is telling
them, listen, don't
wait... Get off the
sidelines... buy some
RIMM.
Historically, raising
numbers of a tech stock,
above the consensus, by
the Ax is a way to jump a
stock higher. And
Sanderson knows that, even
in a bad market... but it
is also a great reason to
buy...
You put the Ax and the
Street High together, and
it's like a chemical
fire... not a regular
fire. The shorts cannot
put it out, and it sends
the stock higher. That's
how RIMM was up $7
yesterday and $1.18 today.
Now, because RIMM is an
umbrella name for tech...
that means, when it goes
up, it generally pulls the
rest of the Nasdaq with
it. That's what ignited
the rally, and that's
where the pin action
kicked in...
. . . .
.
The Bottom Line!:
I'm giving Sanderson a
standing ovation.
Now you know how the
process works. The
"Ax"... the top analyst in
a given name on the
Street... the guy with a
supposed edge... When he
takes his target up to
Street high... higher than
everybody else... when he
takes his earnings up to
Street high... higher than
everyone else... the other
analysts are bound to
follow, and there will
generally be enormous
buying... pulling up not
just the stock in
question, but often all
the associated names and,
in this case, the Nasdaq
itself. There you
have it... the
anatomy of yesterday's
tech rally.
. . . .
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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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RIMM |
142.16 |
143.15 |
Research
In Motion (RIMM)
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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) |
|
 |
MCD* |
59.21 |
58.95 |
Mad Mail
McDonald's
(MCD*)
Q:
I was looking at
the Beijing
Olympics and I
was thinking of
a play on the
games... apart
from
Focus Media (FMCN),
which I have
been hearing
about on the
show. I
was thinking
about buying
some MCD stock,
but I heard the
Chinese prefer
noodle soups to
fast food.
What's your
take?
JJC:
First of all,
I'm not
recommending any
Chinese stocks,
including FMCN,
which missed the
quarter.
No Chinese
stocks at all.
I like that
Gushan (GU)
as a spec.
Why?
Because China's
been a bad
market, and I
continue to
think it will
be. The
only one that I
think has been a
really good
stock for us
over there is
Yum! Brands (YUM).
I do believe
that YUM - which
is Kentucky
Fried Chicken -
is going to
continue to have
a good year, in
large part,
because of
China.
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FMCN |
28.90 |
29.35 |
Mad Mail
Focus Media (FMCN)
See MCD*
comments above
for:
FMCN
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GU |
11.94 |
11.99 |
Mad Mail
Gushan Environmental (GU)
See MCD*
comments above
for:
GU
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YUM |
37.39 |
37.23 |
Mad Mail
Yum! Brands (YUM)
See MCD*
comments above
for:
YUM
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DVN |
120.77 |
120.93 |
Mad Mail
Devon Energy (DVN)
Wildcatters
for ocean
drilling?
Q:
The vast
majority of the
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