Cramer's 'Mad Money' Recap: Beware of the Wrong Cues (Final)
NEW YORK ( TheStreet) -- Shoot first, ask questions later. That's a sure-fire way to lose money, Jim Cramer told his "Mad Money" TV show Tuesday. Cramer reminded viewers that taking their cues from the wrong stocks can lead to major losses.
Case in point, the home builders. When KB Homes (KBH) reported a gloomy outlook last week, the entire rally in the home and home-related stocks was thrown into jeopardy. Cramer said everything, from the home builders to Sherwin-Williams (SHW) and Home Depot (HD) , sank on the news.
But then today, homebuilder Lennar (LEN) blew away its earnings, signaling that KB Homes' problems were its alone and not that of the entire industry. Taking cues from KB Homes, said Cramer, was a mistake.
The same strategy is playing out in multiple sectors, noted Cramer. Investors sold off the restaurant stocks when McDonald's (MCD) stumbled last week, yet today fast growers Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) hit 52-week highs. Shipper FedEx (FDX) took down shares of UPS (UPS) and John Deere (DE) took down the fertilizer stocks.
In all of these situations, the prudent call was to buy, said Cramer, which is why Baker Hughes (BHI) has created opportunities to buy Schlumberger (SLB) and Ensco (ESV) , a stock which Cramer owns for his charitable trust, Action Alerts PLUS. And it's also why Family Dollar (FDO) will likely cause weakness in rival Dollar General's (DG) secondary offering of shares. Cramer said both of these stocks are buy, buy, buys.
Executive DecisionIn the "Executive Decision" segment, Cramer once again welcomed Manny Chirico, chairman and CEO of PVH Corp (PVH) , a stock that's risen 130% since Cramer first got behind the company in Jan 2008. PVH recently delivered an 8-cents-a-share earnings beat on better-than-expected revenue.
Chirico said that PVH is well positioned for 2012 and the company is seeing stronger-than-expected gross margins and lots of momentum in many of its brands. He said that what he dubbed "affordable luxury," items in the $40 to $70 price range, are in the sweet-spot of what American consumers are looking for. Chirico also noted that with gasoline over $4 a gallon, PVH is starting to see some pressures in its more moderately priced brands.
Turning to sales overseas, Chirico said despite weakness in Europe, PVH still expects to see sale increase 8% to 10% in 2012, although he said that he can only provide guidance on the fundamentals and cannot predict how currency fluctuations may impact the company.
China was also a positive note for PVH, said Chirico. He said both the Tommy Hilfiger and Calvin Klein brands could become worth $1 billion in that country within the next four to five years.