When the Fed drops interest rates, retail usually wins, Cramer said. So he’s been recommending the sector since the central bank’s 75 basis-point cut. But investors need to be selective.
Phillips-Van Heusen [PVH
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] is priced for “the death of the consumer,” Cramer declared, but thanks to rate cuts and Washington’s stimulus package, that consumer might not be so dead after all. The stock’s down a massive 30% since Cramer recommended it Sept. 5, but now might be a better time to give PVH a look, he said.
PVH beat its third-quarter expectations, raised year-end guidance and predicted earnings per share would grow 12% to 16%. The problem, though, CEO Emanuel Chirico told Cramer today, is “we’re dealing with a consumer right now that is a little bit slower than it was before.”
The chief executive admits that cost pressures are up a bit, and so are inventories by about 5%, but PVH is coming into 2008 lean and healthy for the most part, Chirico said.
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“The stock is too cheap,” Cramer said. “I think it’s worth buying ahead of the stimulus cuts.”
He also likes Liz Claiborne [LIZ
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] for a trade, Jones Apparel [JNY
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] for its execution, and VF Corp. [VFC
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] he’s been a fan of for some time.
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