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 – they’d rather go to Best Buy – 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, Palm or even AT&T . 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.

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.

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