NEW YORK (TheStreet) -- TheStreet's Jim Cramer says the two factors he is most worried about headed into the weekend are whether the cyclicals can keep rallying and whether retail will decline.
The Consumer Confidence Index rose to 82.3 in March, its best number since Jan. 2008, just at the beginning of the recession. Cramer notes this number was terrific and points out that Restoration Hardware (RH) and Finish Line (FINL) have recovered nicely with quarterly results that exceeded expectations. He adds it's possible that retail can be saved from "a vicious head-and-shoulders pattern."
As for cyclical stocks, Cramer notes that China could announce its new stimulus plans on Sunday night. If that happens, then the rally would continue.
"We rate FINISH LINE INC (FINL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 7.2%. Since the same quarter one year prior, revenues rose by 22.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- This stock has managed to rise its share value by 49.25% over the past twelve months. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FINL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 2266.3% when compared to the same quarter one year prior, rising from -$0.11 million to $2.32 million.
- FINISH LINE INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FINISH LINE INC reported lower earnings of $1.42 versus $1.60 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $1.42).
- FINL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: FINL Ratings Report
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