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
- Lightning Round: CVS Caremark, Devon Energy, Tyson Foods and More
- Lightning Round OT: Ford, NewAlliance Bancshares and More
- Why You Should Speculate on Stocks
- Next Week’s Top IPO
- Cramer: 5 Earnings Reports to Watch Next Week
- More Americans Lighting Up? Buy This Stock
- What Happened to Cypress Semi?
- Lightning Round: Raytheon, Salesforce.com, Pepsi and More
- Lightning Round OT: Apache, Brocade, Allergan and More
- Cramer Goes One-on-One With Costco CEO
MAD MONEY FEATURES
PODCASTSWatch the Lightning Round whenever and wherever you want.
OFFICIAL MAD MONEY WIDGETGrab this all-in-one application and get recaps of the show sent right to your desktop or blog.
CRAMERS SOUNDBOARDAdmit it: You've always wanted to hit the "They
know nothing!" button. Here’s your chance.
CHECK OUT OUR PHOTOSCheck out Cramer on set, back to school, behind the scenes and more.
SHOP FOR MAD MERCHANDISEBuy Cramer books, bobbleheads and other Mad Money merchandise.
RING TONESPick up the phone! It's Cramer! New Mad Money sounds for your cell phone.
TEXT MESSAGE ALERTMad Money's mobile. Get show highlights sent to your phone.
Text Size 
Cramer put the same test and 10-point rating system he used to compare McDonald’s [MCD
Loading...
()
] and Burger King [BKC
Loading...
()
] to work in a head-to-head match-up between Tiffany & Co. and Coach.
(You can read more about how Cramer – and Wall Street’s big money mangers – values stocks in that McDonald’s Vs. Burger King post.)
As we said, sector matters the most. Money managers look for sectors that will outperform the S&P 500, a widely recognized measure of the market average. And sectors are important because they account for 50% of a stock’s performance. So when you’re considering retail names like Tiffany [TIF
Loading...
()
] and Coach [COH
Loading...
()
], you have to think about that sector’s potential in this environment.
Inflation no longer seems a concern to the Federal Reserve and that frees up the central bank to cut interest rates if need be. So at first glance, there’s reason to think the big money will look at retail as a recovery play. But both the American and Japanese – the second biggest market for Tiffany and Coach – economies aren’t standing on solid ground just yet, so this sector’s a mixed bag. Since stock get five points in Cramer’s rating system for sector alone, he’s giving both companies 2.5 points.
When it comes to growth, there’s no question Coach, with a 16% long-term growth rate to Tiffany’s 13%, is the better performer. Give 2.5 points to Coach and one to Tiffany. Score: 5-3.5 Coach.
Coach wins in the consistency category as well. The company’s brought in new designers more recently and Cramer’s a fan of CEO Lew Frankfort. So Coach gets half a point here to Tiffany’s none. Score: 5.5-3.5, Coach.
Tiffany gets a half point for actually having a dividend, one worth 1.6%. Coach gets none for having non. Score: 5.5-4, Coach.
Raw costs and how companies handle them – especially in this environment – should always get a good look, too. For the fiscal year ending July 29, Coach’s operating margins were 37% versus 19% for Tiffany. No real contest there – Coach controls its costs better. Score: 6.5-4, Coach.
So Coach is clearly the winner here. But how is Wall Street valuing these stocks? Tiffany trades at 12.7 times forward earnings compared to Coach’s 11.7. So the Tiffany actually has a higher multiple despite Coach’s outperformance. According to our calculations, something’s wrong here.
Still, retail is still an iffy proposition right now, so proceed with caution if you’re considering buying Coach. But ultimately, at least according to this rating system, and it’s one that the big money guys use, Coach is a better stock than Tiffany right now.
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website?
Data is a real-time snapshot *Data is delayed at least 15 minutes