Conference Call Nuggets
"Expectations are everything," Cramer reminded viewers, as he once again warned against the dangers of trading off the earnings headlines without doing the homework. Today's lesson, Lowes (LOW), a stock which Cramer owns for his charitable trust, Action Alerts PLUS.
Lowes reported weaker-than-expected numbers, sending shares down 5%. But Cramer said investors who listened to the conference call and paid attention last quarter, knew that these weaker numbers were to be expected.
Cramer said that Lowes cited bad weather, higher oil prices and a weak housing market for some of their weakness, but all of these factors were to be expected. What wasn't expected were better margins, better inventory levels and the company buying back more of its own stock than expected. While the former includes things not in Lowes' control, the latter are in Lowes' control the company executed well. "Imagine how well they'll do when things improve," Cramer noted.Cramer said what was most telling on the Lowes conference call was the company's forecast of a 2% increase in same-store sales. He reminded viewers that stocks only care about the future, not the past, and this uptick was a very good sign. Unlike Home Depot (HD), which is now in year three of its turnaround, Lowes is only one year into its turnaround, and that means a lot more good things to come for the company.
Top Restaurant PicksCramer kicked off his new "Mad Money Restaurant Guide" series by putting five restaurant stocks onto the burner to see which ones could take the heat. The contenders included BJ's Restaurants (BJRI), Buffalo Wild Wings (BWLD), Texas Roadhouse (TXRH), Jack in the Box (JACK) and Sonic (SONC). Cramer said his criteria for these growing restaurant chains included operational excellence, profitability, same-store sales growth, valuation and of course, overall growth potential. He said among the group, Texas Roadhouse has been falling short on its projections while Sonic has been missing some of its franchise goals. Jack in the Box, on the other hand, may now be too big, and therefore lacks growth. That leaves Buffalo Wild Wings as Cramer's runner-up in his restaurant cook-off. He said Buffalo Wild Wings has 700 locations in 45 states, but still has lots of room to grow. He said this stock is a steal at just 19.8 times earnings because it has a 21% growth rate. BJ's Restaurants was Cramer's No. 1 choice amongst the group. He said this chain only has 100 restaurants in 12 states, which leave the most amount of growth ahead of it. The company plans to open 15 more locations this year, a 14% boost for a company that's growing over 20% annually. Cramer said investors should be prepared to pay up for BJ's, which trades at 38 times earnings and is just one point off its 52-week high.
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