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Opening Segment 1
Title: |
'Pin Action'
leading into 'Go Go
Gadgets' |
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. . . .
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Featured Stock(s): |
Wal-Mart (WMT)
- from their
conference call.
GameStop Corp.
(GME)
See Opening Segment 2,
below...
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JJC: People
are always asking me the
same question... "Jim,
what do you think of the
stock that I own?"... I'd
like to think that, once
they get done with those
questions, somebody would
just ask, "Jim, where do
you get those ideas for
the show?"...
Tonight, I'm going to
answer that question point
blank... I'm going to do
it by looking at the
largest company that does
retail in the world...
I'm going to look at
Wal-Mart (WMT)
in a way that most of the
media don't have the time
or the inclination to
do... What I'm going to do
is give you the WMT pin
action... you hit one pin,
you find out what other
pins are going to do...
WMT's conference call
yesterday, on what was
definitely was a blowout
quarter - buy, buy, buy! -
I mean, really, it was a
great quarter for WMT...
It was a gold mine... That
conference call has so
much in it...
Now, I'm sure you've probably
heard way too much about how
good this is for WMT... and how,
in a vague way, it's great for
retail, although we heard
otherwise today... I
don't really care about WMT for
the purposes of tonight's talk.
You see, WMT's conference call
was full of great ideas... the
kind that can make you a lot of
money... the kind you want,
especially now that yesterday's
oversold rally has made things
look a little better...
Look, I don't think the positive
sentiment is going to last...
and today's 92-point decline,
after a great opening, says,
once again, don't overstay your
welcome on the wins...
But we'd be fools not to take
advantage of what is still an
oversold market to try to pick
at some good stocks...
This is a show where we try to
teach you how to invest... and
that means not just doing the
kind of in-depth analysis that
we did every day at my old hedge
fund... but also showing you how
to do it yourself...
So let's do a homework-driven
show...
And the goal of good homework is
going to tell us what's going to
end up going higher... Tonight's
show is all about the rigor...
Back to WMT, where 100 million
people shop each week...
WMT's quarter - when we read
the transcript of the conference
call - we found out why it
was a great quarter...
See, it's not just enough to
know that they beat... How did
they do it?...
The first step to understanding
what we're going to do tonight
is that maybe 10% of you will
listen... Nothing is more
important than reading
the conference call...
Google the company,
check their website, click
on the presentation!...
Boom, boom, boom!...
We look at it, and then we begin
to extrapolate to get where the
ideas come from for Mad Money.
. . . .
.
Here's what WMT said...
"Electronics will continue to be
strong for us this Christmas...
in such items as televisions...
in such items as GPS (global
positioning systems)"...
How about digital cameras?...
Computers?... Video
games?... Yeah, they just
gave us everything... they just
gave us a list of everything
that's working...
You've got to bring in some
rigor, because not everything
that's working at WMT is worth
buying, so we find what's too
hard to invest in... and we
identify the areas that are too
fickle, and the commodity plays,
where there's not a lot of money
to be made...
. . . .
.
First, digital cameras, okay...
What do we think of digital
cameras? Well, here's what
we think of digital cameras...
We think they're a no-go, as far
as I'm concerned. They're
all made by Japanese companies.
That makes them too hard to buy.
Sandisk (SNDK)
makes that flash memory that
goes inside... Flash is way too
much of a commodity... We tried
to catch that before.
Enough! Enough!...
That is the genuine,
unbelievable falling knife!...
. . . .
.
Second,
global positioning systems... I
don't know... Look, I've been
giving you Garmin (GRMN)
which, at one time was this...
(bull sound)... but now it's
don't buy, don't buy... because
they're involved in a bidding
war with TomTom, over TeleAtlas
(traded overseas), which is
digital cartography - a word we
don't use very often on the
show... The stock's going to be
under a lot of pressure. I
think it's best to take a pass -
don't buy, don't buy - on our
friend GRMN...
. . . .
.
Third...
WMT says computers are
working...
I don't know. I've been a
big backer of Hewlett-Packard
(HPQ*)...
I own it for my
charitable trust.
I'm not backing away at all.
But WMT is not one of their big
customers, and PCs only make up
about a third of their sales so,
while it's a good play, it's
only an okay play on the WMT
call. HPQ* is really a
play on printers...
On the other hand, WMT's been a
big focus for Dell (DELL),
and DELL could be a big winner
here, but I still like HPQ*
more... This is strictly a case
of the proven versus the
still-to-be-proven, now that
Michael Dell's back running the
show...
. . . .
.
Which
leaves us with TVs and video
games...
In general, the TV business is
too cut-throat for us...
But there is one great play, and
I'm not going to tell you what
it is until after the commercial
break [next
segment below]...
Video Games!...
Bingo! This is the jackpot
off of WMT's call...
Okay, should we do Activision
(ATVI)?...
game maker of choice?... I can't
give it two thumbs up... They
have a lot of great games... I
know I'm going to have to get
that Guitar Hero 3...
My colleague... Mike Cammo, says
that the expectations at ATVI
have gotten too high, as he
believes that some key
franchises, like Tony Hawk, are
in major trouble... and that
2007 is going to be extremely
hard to top next year...
I like that... When you have a
comparison that's going to get
hard, people start selling
now... Cammo's no dummy...
He was telling people to sell
THQ Inc. (THQI)
in the mid-$30s... (now selling
at around $26.60)...
Which leaves us with... yeah, I
don't care! I've said it
before. I'm saying it
again...
GameStop Corp. (GME)!
It's come down a lot. GME
is my takeaway!
They're the largest video game
retailer. If games are
good for WMT, then that means
they are going to be fabulous
for GME because, if you're a
real games aficionado, you don't
buy games at Walmart, you buy
them at GameStop!
This stock has the added
advantage - buy, buy, buy! - of
having come down 6 points, or
10% from its high... during the
strongest month for video games
in its history... that's
November.
This is a triple buy - buy, buy,
buy! - off the WMT quarter...
especially since we know from
Mark Penn's brilliant, and
loaded with good ideas,
Microtrends
book, that video game buyers
aren't at all that economically
sensitive...
I've to tell you, the gamers are
now a lot older, and a lot more
addicted to playing more
than most expect... My guy Cammo
says that this November is going
to be unbelievable... even
bigger than September.
If you go back and read
the GME conference call,
it's really extraordinary...
Those guys are confident, but I
don't think they have any idea
how good this November's been...
We have Halo 3... Hey!
Halo 3 saved Microsoft (MSFT)'s
quarter!...
In fact, GME's biggest problem
may be having enough room to
carry enough of these hot games
to meet demand...
That's what I call a high...
quality... problem!
. . . .
.
The Bottom Line!:
You get a juicy
conference call...
You know what I say about
conference calls... That's
my phone sex... And then
you work your way through,
as a process of
elimination, to the best
plays that, to me, you
know, are the most heated
moments... the hot-breath
moments... and I think
that video games is one...
GameStop Corp. (GME)
is the way to play it and
then, after this break,
I'm going to give you
another one...
[See Jim's 2nd Opening
Segment stock picks
below... ]
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