jbde

Infamous Anniversary - Cramer's Stop Trading! (8/1/08)

Will Cramer fall on his sword? One year from now, will he admit he got it wrong? That he knew nothing, that he had no idea!

SBUX just sells over-priced coffee. Over-priced was a fad that has faded as the 'new rich' those who had money to through around like water to live a pretend lifestyle now find their gravy train of home-equity and credit card cash is at an end. To this end, SBUX has tried to reinvent itself through selling food??? Why compete with the likes of McDonalds? So what did McDonalds do, they began to sell 'up-scale' coffee as a simple menu move for big profits and a crush of SBUX's core business. If McDonalds find it necessary, they will put in WiFi areas with an intimate atmosphere - and then SBUX has nothing unique to offer. SBUX is having to close stores - stores that were put in 'trendy' spots with high rents as everyone trampled each other to sell premium items at 'fluff' prices. $4 scoops of ice-cream come to mind as well.

Now for CROX, sure the shoes were 'fad' but the redeeming qualities of Croslite is being supporting, comfortable and most importantly odor-proof are unique and hard to duplicate. Court victories against the rip-offs are falling to CROX. As a relatively small company, although some 800MM in sales this year, it has broadened it product line in shoes and apparel and is moving form its core products. This process takes time, but not much. As a brand it is not a fad. As it garners shelf-space and a growing presence through company owned stores to showcase its entire product line, it will return as a cash machine and will likely be taken out instead of being allowed to be a competitive force. As for scare talk about bankruptcy, they are far from it. This talk enables the bears to cover their shorts and even go long. What the short position fall over the next couple of months as the shorts find something else with downside potential. The smart money will tell what it going to happen.

In the near term, market rallies that make the public assume that all is well, will raise all boats, including the likes of CROX and SBUX. So let's see the percentage moves for each using Friday's close as the benchmark - SBUX 14.42 and CROX 4.44. Timeframe - by the election.

I do not have a position in either stock. My position was long CROX at around 7 and sold at 9.88 the day it ran to 10.55 as the shorts got gunned before the shoe was dropped the next day. Pun intended. I believe that CROX presents a better chance of a 50% trade in the next couple of months than does SBUX.