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Ralph Lauren: Prepped for Profit

Ralph Lauren is another stock that Cramer wants investors to buy – but only at the right price.

All week he’s been highlighting the companies that reported the best earnings this past quarter – Jones Apparel , Orbital Sciences, Tyco – because he thinks they’re going higher. But these stocks are already up following their quarterly reports. So the strategy calls for a little patience until the price is right.

Why Ralph Lauren ? It’s a high-end retailer with great execution. And as gas prices fall and the waning of inflation fears frees up the Federal Reserve to cut interest rates, this company – and retailers in general – should benefit.

RL’s been playing it smart, buying back its brand licenses from distributors and selling its products directly. The move boosted revenues, just in Europe, to about $1 billion from $150 million. Now the plan is to put the strategy to work in Asia.

The company’s also switching to better distributors in Europe to boost sales, and Cramer said there’s still plenty of room to grow in India, China and Russia, all places where a burgeoning middle class has some petty cash to spend.

Cramer said there’s a good chance the eight “hold” ratings on this stock will turn to buys, sending the share price higher. But he doesn’t want anyone paying up for RL. His entry point is in the $65-$66 range. It’s the only way, he said, the play on Ralph Lauren will pay off.



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