CSI Mad Money: Cramer's 5 stocks left for dead

Sure you've heard about those CSI shows on other networks. But at "Mad Money," CSI stands for Cramer's stock investigation.

"This is where we do an in-depth analysis of groups that have been left for dead by the market," said Jim Cramer dressed suspiciously like Nick Stokes.

As we first discover Cramer, he's in his lab, err office, closely examining the flesh and bones of five familiar names: DSW, Sears, Lands' End, Abercrombie & Fitch and Ann Taylor.

"These are all stocks that, at some point this year, were brutally slaughtered. But that's where the similarity ends. Some of these retailers are knocking on death's door, while others are bouncing back to life with a vengeance." Cramer said.

Following is Cramer's analysis:


For DSW shareholders, the crime occurred at the end of May when the shoe seller reported a disappointing quarter and shares fell from $32 down to $23 in a single session.

"Pretty much everybody bailed on DSW after that, Cramer said. But last month I told you DSW was merely the victim of transient fashion issues and bad weather and that a comeback was on the way. Sure enough, when the company reported again last night, it blew away the numbers, beating Wall Street's sales and earnings forecasts and raising its full-year guidance."

In turn, shares march sharply higher, gaining about 10 percent in a single session. "No autopsy needed here." added Cramer with a sly smile, "except for those poor short sellers who are now in a world of hurt."


Going into the quarter, Cramer said Sears didn't have much of a pulse. "Then, the final blow was delivered last Thursday when the company reported a larger than expected loss and missed the estimates across the board, sending the stock down 7 percent in one day."

Looking at the metrics, there appear to be few signs of health.

"This was the company's sixth consecutive quarterly loss, and they lost twice as much money as they did a year ago. And Sears is not just earnings challenged, it's sales challenged, too; its revenues were down 10 percent year over year."

To make matters all the more concerning, the company reported a cash balance of $824 million. "That may seem like a big improvement from the $671 million it had a year earlier, however, Sears spun-off its Lands' End business earlier this year, giving them a one-time windfall of $515 million. And Sears can only do that once. Back out that money, and the company would only have $314 million of cash, which is a pretty bleak."

All told, Sears has seen healthier days.

"Put it all together, and you've got a retailer that just has too many problems. The stock is still a 'sell' even down here at just a couple points above its 52-week low," Cramer said

Lands' End

Once a feared goner, Cramer says Lands' End may be the proverbial victim who escaped the clutches of its captor. Well, that may be a little dramatic, but Cramer did say Lands' End looks much better now that it's wriggled free from Sears, which used to own the company.

"For years, Lands' End was stuck inside the Sears empire, passing along its profits and unable to control its own destiny. Now that it's been spun off as an independent company, I think it has a bright future. In its first quarter out of the gate, Lands' End delivered some excellent numbers, including a 48 percent jump in earnings per share. Lands' End now has the freedom and the resources to pursue faster growth, and its stock is cheap, trading at 15 times next year's earnings estimates. In the end, I think it's a survivor, one that's worth buying here."

Abercrombie & Fitch

Cramer sees Abercrombie & Fitch as akin to the near-death character rising from the grave (and probably scantily clad too!)

"Inventory levels are starting to stabilize and Abercrombie, along with rivals, are closing stores which reduces supply," Cramer said. That bodes well.

"While Abercrombie just made a new 52-week high on Tuesday, it's still more than 30 points off its post great recession peak in 2011, and I think it could have a lot more upside."

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Ann Taylor

Ann Taylor may be like the victim who was rescued at the last minute, by two watchful strangers. However, in this case the strangers are Engine Capital and Red Alder, two large shareholders who have urged the board of ANN to explore strategic alternatives, including selling itself, in order to unlock value.

"Over and over again this year we've seen activist investors push all sorts of companies to create value for their shareholders, so I'm intrigued by this situation, especially since the potential activists at Engine Capital believe ANN could be worth $50 to $55 a share, as much as 31 percent higher than where the stock's currently trading," Cramer said.

"Ann has historically been a pretty strong operator, and if the company doesn't want to sell itself, it has plenty of other options. For example, Ann has a pristine balance sheet, so it could easily borrow a ton of money at very low rates in order to finance a gigantic buyback. Just a lot that could go right here, although given the run-up over the last two days, I think you should wait for a pullback before you pull the trigger on this one."

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