Cramer's Mad Money- Why Did Finish Line Finish Last? (9/24/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV program, Friday September 24.

Finish Line (NASDAQ:FINL), Nike (NYSE:NKE), Foot Locker (NYSE:FL)

If Finish Line (FINL) generates 60% of its revenue from sales of Nike (NKE), could Nike have a good quarter and Finish Line's earnings disappoint? Apparently so. Nike beat The Street's estimates by 13 cents with an 8% rise in revenues. Future orders were up 13%, the biggest increase in a decade. With demand rising, Nike had to step up production to keep pace.

That was the problem faced by the Finish Line; the company was so careful about keeping inventory down that it didn't have enough Nike shoes to meet demand, and factory delays and transportation problems made restocking inconvenient. That is the main reason why Finish Line missed estimates by 5 cents. Cramer would buy Foot Locker (FL) rather than Finish Line, since FL has fewer issues with execution and offers a dividend of 4.2%.

Microchip Technology (NASDAQ:MCHP)

The chipmakers seem poised for a breakout, and Cramer would play the trend with Microchip Technology (MCHP), even though it isn't best of breed. Cramer thinks the stock is cheap enough to buy and has a solid 4.2% dividend.The company derives 81% of its revenues from microcontrollers, which are all-in-one chips used in a dizzying array of products. MCHP currently controls the 8-bit microcontroller market, but is gradually taking market share in the 16 and 32 bit business. The company recently beat estimates by 4 cents a share and saw an increase in revenues. The company's multiple of 12.5 times earnings is more like 10 when taking into account the $6 per share. Cramer would buy the stock even though it is flirting with its 52-week high.

Game Plan: Jabil Circuit (NYSE:JBL), Pachex (NASDAQ:PAYX). Walgreen (WAG), Family Dollar (NYSE:FDO), McCormick (NYSE:MCK),

With stocks up in September, Cramer told viewers not to be worried about taking profits. On Monday, Jabil Circuit (JBL) and Paychex (PAYX) report; Cramer would not trade the stocks but would just see what the companies have to say. Jabil should indicate whether Friday's rally was for real or was just spurred on by takeover speculation, while Paychex is a good tell for the economy ahead of Thursday's jobless number.

Walgreen (WAG) reports earnings before Tuesday's open. Cramer thinks the company is unlikely to break the string of bad news it has been facing, particularly with such intense competition. Tuesday will also see the release of the Case-Schiller numbers on housing. Cramer expects the bears to manipulate news that housing prices have declined.

Family Dollar's (FDO) report on Wednesday should give some information about the consumer. McCormick (MCK), the leading spice maker, is a buy on any decline after its report on Thursday, according to Cramer, because the company is "one of the most consistent" companies and is a "huge moneymaker."

A lack of improvement in Thursday's jobless claims may result in criticism for Obama and Cramer says the Chicago Purchasing Manager's Index is an important number to watch to justify the September rally.


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