Up and down Wall Street, pros are wondering if a handful of stocks that suffered sharp declines recently are about to reverse direction.
Largely, bulls are hoping the worst is over for Coach, Whole Foods, Panera, and Target.
Because each is a bet on a stronger consumer, you may be tempted to view these stocks collectively. However, Jim Cramer says, with each stock facing company specific headwinds, it's probably smarter to address them one at a time. His comments follow:
#1 Coach
In the case of Coach, a luxury apparel maker, Cramer said developments appear to be positive. "When you do $700 million in men's fashion and $500 million in China over the course of a year, that's big. Chief Executive Officer Victor Luis sounds like, at last, he has a handle on things." Looking at the stock, Cramer says you might want to put it on a watch list but not pull the trigger quite yet. "I think it's bottomed. I just don't know if it is going straight back up," the "Mad Money" host said.
#2 Whole Foods
Looking at Whole Foods, a natural and organic food seller, Cramer is optimistic, but it's a cautious optimism. "I can't justify paying 26 times earnings for a slower grower than Kroger at 15 times earnings, especially when Kroger has a very healthy buyback. To me Whole Foods can trade to the low 40s on hope that it has at last bottomed, but without real evidence that initiatives are working, I would rather own Costco with much better numbers and a solid growth path."
#3 Panera
Cramer's commentary suggests Panera, a gourmet sandwich maker, also warrants close attention. He said, "When the CFO left, I expected the stock to get hammered," but it didn't. When a stock fails to decline on negative news, pros, such as Cramer, view the price action positively. However, Cramer wouldn't necessarily pull the trigger, either. "Personally, I'd wait for the national roll-out of Panera 2.0, which is currently showing some real good results in North Carolina."
#4 Target
Target, a general merchandise retailer, is largely a bet on the company's new leadership. "You are getting a 3.5 percent yield while you wait for CEO Brian Cornell to turn it around. Ultimately, I think that the damage from the data breach will die down. If Cornell has a turnaround strategy you could see the low 60s before too long."
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All told, Cramer said given developments, shorting any of the names above is a mistake. However, he's not an aggressive buyer either. "I am heartened, however, that all these stocks seem like they are done going down and hence are, indeed, worth speculating on, if only because they are washed out and not as bad as they used to be. They were darkest before dawn and today is dawn. But dawn does not mean a straight up path."
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