Mad Money: Sell Block: Under Armour Has to Go - Sell Block Archive

FEATURED SLIDESHOW

  Who Is The Worst CEO?
Mad Money needed new inductees for its
Wall of Shame, so we asked viewers for
  nominations.

RECENT POSTS

Get stock and market information from Mad Money's Jim Cramer sent to your mobile phone.

Road Rules

Investing can be confusing. Luckily, Cramer has mapped out some road rules for all you Home Gamers trying to navigate the jungle that is Wall Street. Think of it as "Mad Money 101" –- some fundamental advice to keep in mind as you play the market. Whether you're a first time investor or a seasoned financier, it's always good to remember the basics.

Watch the Videos

Text Size

Nov.09

10:53 AM ET

Friday, 9 Nov 2007

Sell Block: Under Armour Has to Go

Posted By:Tom Brennan

Topics:Stock Market | Stock Picks

Sectors:Retail

Companies:MGIC Investment Corp | Ambac Financial Group Inc | PMI Group, Inc. | Under Armour, Inc.

It’s time to dump Under Armour, Cramer said during this week’s edition of Sell Block, especially after this week’s insider selling.

CEO Kevin Plank vigorously defended his company after analysts expressed concern about the retailer’s inventories, but then sold 1.5 million of his shares in Under Armour [UA Loading... () ]. It’s not that insider selling is bad, but Cramer said he felt foolish after championing Plank’s defense, he said.

Regardless, an increase in inventories means UA would have had to discount its apparel to move it, and discounts equal estimate cuts. That’s a definite loss of momentum for this high-multiple stock, so it was probably time to sell UA anyway, Cramer said.

Look at the facts: Under Armour’s inventory and loss in momentum, the stock is trading at twice it’s growth rate – which is where Cramer downgraded Starbucks [SBUX Loading... () ] and Whole Foods [WFMI Loading... () ], two longtime favorites – and the remaining markets the company wants to enter are fraught with competition and lower margins.

It’s time to let go of UA.

A final note: Investors shouldn’t be tempted into buying Cramer’s Four Horsemen of the Mortgage Apocalypse – PMI Group [PMI Loading... () ], MGIC [MTA Loading... () ] and Ambac Financial Group [ABK Loading... () ] – no matter how cheap they get. They are the Achilles heel of this market, he said. They didn’t make it in 1990’s troubled market, and he doesn’t think they’ll make it now.

Click for the rest of tonight's show

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?

Tools:

Print Email

Previous Post Back to Main Page

ADD COMMENTS