Broken stock or broken company?
Just because a stock is broken doesn't mean a company is broken. Of course sometimes it does. What does Jim Cramer make of Best Buy, J.C. Penney, and Sears, 3 stocks that are all negative year to date?
Best Buy
Since Jan 1 shares of Best Buy are down about 30%. Yet Cramer does not think the company is broken. "I believe the comeback remains intact," he said. The "Mad Money" host cited efforts to close stores that were performing poorly as well as improved service and selection as reasons to believe the future of Best Buy still looks bright. "Also, I like the long-term prospects because Best Buy is connected to the housing sector, which is showing strength," Cramer added. "All that has happened here is that the stock went too far too fast; hence the decline."
JC Penney
Year to date shares of J.C. Penney are down about 15% and Cramer isn't quite sure what to make of it. He believes the department store has overcome any negative overhang presented by former CEO Ron Johnson, who failed in his attempts to transform the retailer to a store of so-called everyday values. "The returning CEO Mike Ullman, has stabilized the operation and there seems to be enough money in the till to continue that stabilization," Cramer said. "However, now that all of that fancy stuff of Johnson's is gone and Ullman's returned the place to form, you just have, a so-so retailer. Can a so-so retailer triumph in a world where even well-capitalized outfits like Target and Wal-Mart are struggling? I'm not sure." Cramer added that he thinks the stock can rally but he only sees it as a trade, not a long-term investment.
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Sears
Year to date shares of Sears are down about 10%. Of the three retailers listed here, it's down the least, yet Cramer is most skeptical of this one. He says Sears lost its way ever since it merged with Kmart. "Now it's telling us that it's going to sell Lands End to bring out even more value. Wait a second, Land's End's probably the best thing Sears has going. This company's selling winners to fund losers, and that's sucker's play when it comes to stocks."
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