Way Beyond

Nobody expected this. Shares of Bed Bath & Beyond (BBBY) soared overnight. Have you ever shopped in one of these stores? I wouldn't wish that experience on my worst enemy. In what has shaped up as a stellar season for the retail crowd, BBBY still turned in a rotten performance, just less rotten than expected.

You all know what the Redbook is, right? Reported every Tuesday morning, the Redbook tracks comparable store sales at chains, discounters, and department stores. Throughout the early days of the recovery, the very best of these reports usually hit the tape at year over year growth of 5%, and that was not the norm. As e-commerce sites such as Amazon (AMZN) grabbed more and more market-share, y/y Redbook growth had fallen to little more than zero. The entire industry longed for 2% growth. Fast forward, the year over year print has not hit the tape below growth of 4% since July, worked it's way through the holiday season at a rough 7%, and the last two weeks have printed in the 9% growth area, Truly remarkable.

Still for the quarter reported on Wednesday night (ended on December 1st), BBBY reported EPS of $0.18. That beat by a penny, but the year ago comparison is $0.44. The firm earned revenue of $3.03 billion. That number did show some growth... 2.7% y/y, but missed expectations. Basically, the stock acted so well over night because the firm guided fiscal 2019 to "be about the same as fiscal 2018". Well, woop dee darn doo.

With any luck, the stock will open above $14. Traders long these shares can hope for some support at the 50 day SMA. Risk reward possibilities are not awful here, but I will not get involved, and if I were coming in long, I would likely shave something off of the position on this move. My thoughts....

One share of Kratos Defense (KTOS) is a better long than one share of Bed Bath and Beyond.

One share of Salesforce (CRM) is a better long than 10 shares of Bed Bath and Beyond.

One share of Amazon is a better long than 115 shares of Bed Bath and Beyond.

Long all three? Of course I am.

(Amazon and Salesforce are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN or CRM? Learn more now.)

(An earlier version of this column appeared at 8:19 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen "Sarge" Guilfoyle, Jim Cramer and other experts throughout the market day.)

At the time of publication, Stephen Guilfoyle was Long KTOS, AMZN, CRM equity.

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