Low Expectations Can Bring a Floor

Two little words: "top estimates." They are defining at this moment. We saw those two little words in two stocks we didn't expect to see them in yesterday: Walgreen (WAG - commentary - Cramer's Take) and Tiffany (TIF - commentary - Cramer's Take). These were two serial underperformers in this era, companies that seemed to miss the quarter so often that it felt like clockwork.

Not yesterday. Both companies disappointed, yet the numbers from the Street were so low that the companies topped the range. So they vaulted up.

Both companies have had their fair share of reversals in a tough economy. With Japan back in a depression and the expensive purchases in the U.S. out of the reach of many in the newly middle class -- going the wrong way -- you could see how Tiffany would be hard-pressed to do anything but disappoint. But the analysts knew it, and next thing you know, TIF finally summoned it up -- cost cuts, inventory declines? -- to make an upside surprise.

Walgreen was more complicated. I still really don't understand how they did it, a combination of programs they put in to stop expanding and focus on their knitting and the dismantling or Rite Aid all played a role.

Either way, when estimates get too low, what you have is the kind of bottom we have been looking for. You don't get a screamer to the upside when this happens, but you do get a floor.

Given how scarce floors have been, it is nice to finally have one underneath...

At the time of publication, Cramer had no positions in the stocks mentioned.

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Know what you own: Other companies in the retail industry include Costco (COST - commentary - Cramer's Take), Wal-Mart (WMT - commentary - Cramer's Take), JC Penney (JCP - commentary - Cramer's Take), Sears (SHLD - commentary - Cramer's Take) and Target (TGT - commentary - Cramer's Take).

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