Skip navigation
MOST POPULAR RELATED TAGS
  • TOPICS
  • SECTORS
  • COMPANIES

MAD MONEY FEATURES

Podcasts PODCASTS
Watch the Lightning Round whenever and wherever you want.




Widget OFFICIAL MAD MONEY WIDGET
Grab this all-in-one application and get recaps of the show sent right to your desktop or blog.




Soundboard CRAMERS SOUNDBOARD
Admit it: You've always wanted to hit the "They
know nothing!" button. Here’s your chance.




Mad Money PhotosCHECK OUT OUR PHOTOS
Check out Cramer on set, back to school, behind the scenes and more.




ShopSHOP FOR MAD MERCHANDISE
Buy Cramer books, bobbleheads and other Mad Money merchandise.




Ringtones RING TONES
Pick up the phone! It's Cramer! New Mad Money sounds for your cell phone.




Mobile AlertTEXT MESSAGE ALERT
Mad Money's mobile. Get show highlights sent to your phone.







Text Size
Jun.10
8:58 PM ET
Wednesday, 10 Jun 2009
Time-Sensitive Trade on RadioShack

Cramer is expecting a panic-fueled rush to RadioShack this week, as Americans race to make their televisions digital-ready by Friday. That’s the deadline Washington has set for the big switch from analog, and he doubts anyone is willing to go with out TV.

You wouldn’t want to miss your favorite show would you? Well, if you still have old-world analog, you’ll need a converter to go digital. And while few people seem to prefer RadioShack [RSH  Loading...      ()   ] – they’d rather go to Best Buy [BBY  Loading...      ()   ] – Cramer thinks this week will be different. ‘Shack is the go-to place for electronics emergencies, and that’s just what Friday’s looming deadline is.

Analysts hate this stock. Right now there is just one buy recommendation on RSH, in addition to 18 holds and one sell. Wall Street assumes that people have been buying their converters all along, and that RadioShack’s earnings will trail off after Friday. But Cramer is expecting a final wave of panic that will prove the analysts’ estimates too low. And when the numbers are too low, he said, the stock goes higher.

This is a trade and only a trade. So if Cramer’s theory plays out and analysts adjust their numbers to meet the sudden rise in converter sales, or the stock is upgraded, investors must sell. There is no reason to own RadioShack other than the analog-to-digital catalyst, even with the company’s exposure to Sprint [S  Loading...      ()   ], Palm [PALM  Loading...      ()   ] or even AT&T [T  Loading...      ()   ]. In fact, even if Cramer’s theory doesn’t pan out, sell RadioShack. That’s how a trade works. You buy for the catalyst and sell immediately after it passes, whether it generates a profit or a loss.

Cramer said the buy-in price for RSH was $15 – don’t pay a penny more. Be sure to avoid market orders, too, otherwise the stock might cost you more than that. The risk here is probably minimal, as RadioShack will most likely fetch about the same price regardless of what happens.

Just remember one of Mad Money’s cardinal rules: Never turn a trade into an investment. If you hang out after the catalyst has come and gone, you’re going to get hurt.





Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?

© 2009 CNBC, Inc. All Rights Reserved

Tools:
PrintEmailAdd This share icon
Next Post
  • digg share
ADD COMMENTS
Remaining characters


Current DateTime: 06:14:06 27 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 09:11:31 27 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 10:38:14 27 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 07:56:30 27 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters