Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday August 27. Click on a stock ticker for more analysis:
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Fall into the Gap (NYSE:GPS)
Although Cramer admits he has disliked retail lately, the sector will be a hot area when the Fed continues to cut interest rates. What was once the worst of the worst, Gap, is now best-of-breed, with a better balance sheet, new CEO Glenn Murphy, $2.7 billion in cash and investments and a revenue of $151.9 billion. In addition, this "great turnaround story" is buying back stock aggressively and is polishing its Banana Republic Brand. Cramer would wait about 5 days before buying.
Unlike LTD and TWB, retailers Cramer thinks deserve to be doing badly, it is a mystery that people seem not to like Kohl's, which has "dropped like a rock;" a full 28% since April. Cramer likes the fact no one is paying attention to Kohl's which sells at 13x forward earnings and has a growth rate of 18%. He also noted the store is focusing on high-end designer brands, such Vera Wang's label. Cramer concluded KSS has the best risk-reward if the Fed keeps cutting and "deserves to be bought."
Fly Like an Eagle: American Eagle Outfitters (NYSE:AEO)
Cramer suggests looking for retail stocks with vigorous insider buying and low evaluations; these factors characterize AEO, which is "worth buying." AEO's sales increased 17% year over year and is currently selling at 12 times next year's earnings. Craner would wait until the stock dips to between $22 and $25 before buying.
Mad Mail: Crocs (NASDAQ:CROX), American Eagle Outfitters (AEO) Although Cramer still believes CROX has further to climb, he admits concern over the company's insider selling; "I will temper my enthusiasm a tad," he said. Cramer added AEO is a good stock for a 7th grader, and is an investment that can be held onto for a few years.
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