Monday, January 21, 2013

Cramer Storms the 'Street Signs' Set

Cramer Storms the 'Street Signs' Set

FRI 18 JAN 13 | 02:30 PM ET

in the meantime, let's get to herb. a red flag on some high-flying stocks. i would like to know, a what makes them look vulnerable here. great question. over the next month, six weeksor so, we see companies come out they are priced forperfection. now what is priced for perfection easy for you to say,varies. it is in the eyes of beholder. when i look at my list, you look at price earnings multiple. going forward or trailing, whichever you want it use. and stock prices. some go up and they don't go down. i put together lists of those. the people i talk to seem it shake their head at it. let's go through the list and wewill break it down further. top of the list, 87 times earnings. such a high number. then growth by acquisition story. under armour. and look down the little totractor supply. costco, such a great company, but hits the list because it has to do everything just right. now of course sherwin-williams. if we break it down to the top three, based on pe or just crazy run in the stock, i wil break it down this way. and i have lumber -- by the way, these three, jim cramer offense to jim. everything has to go right. lumber liquidators.sherwin-williams, which by the way, it has been declining. you wantto keep an eye on that. i know incringly people looking at that over and over. they know there is a new part to the story because there is continued risk there. well keep watching that.actually you mentioned jim cramer. we've got jim cramer. he is currently running out to the set. there he is. come on out, jim.before jim gets mic'd up, i want it push back on you a little bit buddy. sure. first, beauty is not in the eye of the beholder, it is in the eye of the shareholder. and risky stock valued and whyare they so far off their lows and are they close to bankruptcy so it has outsized gains which are somewhat artificial. i don't disagree with you. it is just a matter of just remember it all has to go just right. price to perfection, as they say, jim. all right, chief. what are the pricearnings a year ago for sherwin-williams? for costco? right. oh, you mean like -- yeah, sorry.yes of course you're right on that. i just want it raise the point that -- i'm not going to defend all ten any more. ka ching, ka ching. tractor supply. but some of these, i mean, sherwin-williams was absolutely underpriced. i'm in a biepd on some of these. if we were -- you have to wait for a pull back because they move so much. sherwin-williams, higher price point --look at the nation of -- and pimco says they were investing in housing. right. what about the falling sales growth? i put up my chart and say, i'm surprised to see the sales sliding the way they are, the growth. the growth. comp store numbers arefabulous at their paint stores. remember, the cost of paint hascome down rather dramatically. and it is a housing play. i guess it. but masco, stanley works -- i get it, i get it. i run a distinguish between ulta, something i know you challenged me on and i backed way on. you put up a certain number of stores, ulta will not grow like it did. sure stz i have trouble with the housing place because t may actually be based on say 700,000 housing starts and maybe we go to 1.5 million housing starts. i'm not making any broad calls here. i'm trying to say these thecompanies that the guys on the other side say, they are rippingtheir hair out every time -- see me there. using metrics you used here as to why you think these high flyers could be vulnerable, how long have you been wrong? oh, my gosh. my, when did you start -- wrong and early. wrong and early. by the way -- no, netflix right. chipotle, right. and cramer, under armour -- let herb defend himself. as i told john mackey, co-ceo of whole foods --and former tight end. as he was walking off theet here, i said, red flags i flew over your company many years ago, and i con grat rated him. he did a great job. but there are plenty of people raising issues. but point here, this is a street that expects just perfection. but if it gets it, it goes higher. isn't it a shame chipotle reported a number not so great. stock didn't go down as much as during previous disappointment. because price earnings multiple is shrinking. and i just think what happens isif they miss, they are cut in half. if they make it, they go up. herb, since i first met you -- i have no interest in the stock market. i own no stocks and i will say this. companies in four years, ulta's revenue doubled. yes. gross margin is expanding,doesn't that merit a 27 pe which is not historically outrageousfor that growth rate? i can't wait to hear this. maybe now. but as they grow, and as they put stores in perhaps smaller markets and put them closer together, they could run into the home cannibalization. one time he said, cramer, you're too much. i know you didn't like it because it sounds like -- you have to be skeptical and what i love about herb is herb keeps me skeptical and it should keep the people at home -- is that the only thing you love about him. he is a loveable guy. there are many reasons. generosity in planning dinners that he owes is not one of the thi you love. maybe was it the chicken -- he is saying it a grand slam. the pvh portion of jc penny is a grand slam. and i like mandy very much. you are real good, you know that. he is a good egg. herb is about as good as -- absolutely. he is right more than wrong, by far. jim, thank you. all right, well, the can'tmiss exclusive interview with


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