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Mar.27
6:47 PM ET
Thursday, 27 Mar 2008
Sell Block: Trade In Pairs

Want to learn how to sell like the pros? Then you need to know to how trade in pairs, Cramer explained in Thursday’s Sell Block segment.

For a pairs trade to work, one company has to be really strong and the other really weak. And that’s what you’ve got with retailers Liz Claiborne and Urban Outfitters, according to Cramer.

URBN [URBN  Loading...      ()   ], the retail company best known for proliferating those ironic t-shirts that adorn hipsters everywhere, has three divisions, all of which are kicking butt and taking names. The flagship store that is the company’s namesake and the women’s stores, Anthropologie and Free People, are all seeing double-digit sales growth as well as same-store sales gains. Magazine and online sales are rocking, too. “Everything this company does seems to be working,” Cramer said. It helps that the company’s CEO, Glen Senk, has an eye for merchandise that Cramer thinks is second only to that of J.Crew [JCG  Loading...      ()   ] CEO Mickey Drexler.

On the flip side, there’s LIZ [LIZ  Loading...      ()   ]. In February, the company pre-announced a disaster of a quarter as it sees a decrease in its same-store sales across most of its brands. (Juicy Couture is the exception, as it is the one brand under the LIZ umbrella that continues to post higher same-store numbers). And while URBN can continue to open stores, LIZ is held hostage to department stores like Macy’s [M  Loading...      ()   ] which represent most of the company’s sales and are slashing prices like mad to combat recession.

There’s some good news, though, if you hold LIZ shares. The stock has bounced back courtesy of the recent rally that lifted all retailers, bringing it to a nice level to sell and not think twice about it. But to sell like a pro, you need to pick something up to profit. Cramer thinks URBN should get it done.


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