Mad Money with Jim Cramer - MAD CAP RECAP - The Official Mad Money Blog
RSS FEED
RECENT POSTS
- Don’t Trust Buybacks
- Buying the Right Sell-Off Stocks
- Buy Broken Stocks, Not Broken Companies
- The Biggest Market Myth There Is?
- The Key to a Successful Turnaround
- Lightning Round: Corning, Visa, NYSE Euronext and More
- Cramer’s 3 Stocks to Avoid
- Cramer: Play Defense with B&G Foods
- Cramer: Chico’s Proves Ailing Retailers Can Make a Comeback
- Cramer's Advice for the SEC
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.
Why Inventory Matters So Much
Text Size 
Web Editor, Mad Money
If you want a good read on a company’s prospects, Cramer said Monday, then check the storeroom. Businesses of all kinds — retail, technology, housing, autos — live and die by their inventory.
Inventory is so important, in fact, that it can predict a turnaround in an industry. Because while a glut of product indicates a slowing business, empty shelves often point to one that’s ready to take off. It means that a company has eliminated its excess inventory and is ready to start ordering again. And that ripples out to its customers and vendors.
A good example of this is Best Buy [BBY
Loading...
()
]. When this retailer says that its inventories are low, that helps everyone in the tech food chain. BBY places orders with suppliers to refill its shelves, its suppliers place orders for the components needed to build their products, and so on and so on. Tight supply at Best Buy can cause a bottom in everything from Corning [GLW
Loading...
()
], which makes the glass for televisions, to Apple [AAPL
Loading...
()
] and Texas Instruments [TXN
Loading...
()
], a component maker for cell phones.
Of course, as important as inventory is, there are other factors that play a part as well, such as a business’ ability to obtain credit. During the credit crisis, banks were reluctant to lend, and this halted any potential turnaround in other industries, even those where inventories were low. As a result, companies were unable to get the money needed to finance the next cycle. This doesn’t happen often, Cramer admitted, but it illustrates how important the banks are to the whole process.
Still, “Inventory matters in a huge way,” Cramer said, because it could be sign of a turn.
When this story published, Cramer's charitable trust owned Apple.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
Questions, comments, suggestions for the Mad Money website?
Data is a real-time snapshot *Data is delayed at least 15 minutes
