Buy the Big Earners
Cramer shared a new investing thesis with viewers Monday night: It pays to buy stock in companies that recently reported better-than-expected earnings.
The catch here, though, is that the strategy only works if you get in at the right price. So while earnings season has just passed and we know who the big earners were, most of these names are all up big, meaning they can’t be bought right now.
That didn’t stop Cramer from pulling together a shopping cart of stocks to share with Homegamers. He just emphasized the need to wait for a pullback before buying in. He’ll be sharing his picks all week on Mad Money, and even giving potential investors the right entry point.
For Monday’s show, he put a spotlight on Jones Apparel. Jones delivered 20 cents per share when it reported second-quarter numbers, beating Wall Street expectations by 8 cents. But the stock is up 2% to $18.74 just today, so Cramer recommended waiting for a dip to $17.
Why does he like JNY so much? First, the company left the department store business at the top, selling Barney’s NY for $840 million. Jones also made a great deal with country music star Taylor Swift to sell her branded clothing and merchandise in Wal-Mart starting next spring.
Jones will have its own products in Wal-Mart, too, and the two companies are in talks to bring the merch to Canada. Those who doubt the potential a deal with Wal-Mart might hold need only look as far as Martha Stewart Living Omnimedia , whose stock is starting to move because of the deal, Cramer said.
Then there are the usual suspects of a Cramer stock call: a great buyback (worth 20% of market cap) and a 3.1% yield. Plus a great management team in CEO Wes Card and Chief Financial Officer John McClain.
JNY is a buy, Cramer said – but not until the stock drops to $17.
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