TheStreet.com's Jim Cramer says that next to the consumer, this is the biggest problem facing the otherwise strong companies in this sector.
Doesn't it seem like another day where it is impossible to make money? We have earnings season without any sense that anybody's numbers can be raised. We have an ennui that comes from months of pounding and indecision, and we have stocks that can't seem to go up to save their lives.
Take retail and restaurants. Yet you can't help but wonder whether a Darden (NYSE: DRI) (Cramer's Take) or a Brinker (NYSE: EAT) (Cramer's Take) or a Coach (NYSE: COH) (Cramer's Take) or a Limited (NYSE: LTD) (Cramer's Take) can come back. You can't help but wonder if there's not an Urban Outfitters (NASDAQ: URBN) (Cramer's Take) out there that can turn around or a TJX (NYSE: TJX) (Cramer's Take) that can suddenly hold its own and start rising.
Can Ralph Lauren (NYSE: RL) (Cramer's Take) be that bad? Are J.C. Penney (NYSE: JCP) (Cramer's Take) and Kohl's (NYSE: KSS) (Cramer's Take) never coming back? Did Macy's (NYSE: M) (Cramer's Take) so shoot itself in the foot that it can't recover?
Lowe's (NYSE: LOW) (Cramer's Take)? Saks (NYSE: SKS) (Cramer's Take)? Bed Bath & Beyond (NASDAQ: BBBY) (Cramer's Take)? What about Liz Claiborne (NYSE: LIZ) (Cramer's Take) and Jones NY (NYSE: JNY) (Cramer's Take)?
Does anyone even know how vicious the bear market in these stocks is? Not all of these companies are brain-dead.
Or how about Morton's (NYSE: MRT) (Cramer's Take), Ruth's (NASDAQ: RUTH) (Cramer's Take), Ruby Tuesday (NYSE: RT) (Cramer's Take)? Can't they be worth something?
Ever since the collapse of private equity these stocks have declined pretty relentlessly. They have worn people down like you wouldn't believe.
But what happens in a turn? Shouldn't we think about putting on a basket of these? Maybe that Mortons/Ruth's/Ruby group?
Their balance sheets are almost all really strong. The consumer can come back. The earnings stream is there.
Costco (NASDAQ: COST) (Cramer's Take) isn't the only retailer in this country doing well, give or take Guess (NYSE: GES) (Cramer's Take) and J. Crew (NYSE: JCG) (Cramer's Take), Urban Outfitters (NASDAQ: URBN) (Cramer's Take) and TJX (NYSE: TJX) (Cramer's Take).
But the group has been gaffed and gutted. Somehow I think that some of these can come back. I know it's not gonna happen now. Too many questions. But when? When things turn you won't be able to buy these anywhere near where they are.
Yet, in a world where gasoline seems like it is marching to $4/gallon, where McDonald's (NYSE: MCD) (Cramer's Take), which I own for
Yet, one has to wonder how a solid chain with good financials and good balance sheet simply can't be a buy soon, especially when it is just six months from lapping some really bad numbers.
What really weighs against it besides the consumer? Too many stores and restaurants. Until we see some closings, some trimmings, some shuttings and some bankruptcies, as we saw in 1990, I guess the operative wisdom is "Forget about it."
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long McDonald's.
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Reader Comments (Page 1 of 1)
1-14-2008 @ 12:03PM
Richard said...
Lowe's is lacking in good leadership at the top of the company. The once small regional company has extended debt to grow the number of stores, some in markets that are saturated with home improvement retailers. Many of these stores are duplicating in the markets they are already strong in and do not need another store.
1-14-2008 @ 2:52PM
mack said...
same thing gov needs to lower the pay back row it back like it was years back . I could go out .I know the Gov was trying to bulid up more savings buy having us pay back sooner but there is nothing to save or go out to a restaurant,but if thay would row back for a year or two thing may start to turn around
1-14-2008 @ 7:41PM
Jerry Bluhm said...
Lowe's has great management, the best in the industry, and they have proved it over and over. Lowe's stock has taken a beating as of late, but what goes now must go up if its a super strong company, and Lowe's certainly is. Let's go buy some Lowe's and Home Depot stock and triple our money shortly.