Cramer's Heavy Petting

On tonight’s Cramer found two retail turnarounds that are begging to be exploited.

Cramer’s second pick is Petsmart (PETM).  The turnaround is going well and fuelled by better margins and merchandising.  PETM just jumped 3.25% to $31.20 on Cramer’s comments. It is also worth noting that Petco was bought by private equity. Petsmart could go takeover some of the old stores that Petco closed right after the private equity buy.  The company can win just by doing what it is now and it has special services.  He likes that they have pet hotels and they are becoming the high-end provider of doggie day care and pet pampering.  He also thinks they can start getting better terms from suppliers as they grow, and they are only at 22-times earnings and he thinks it goes to $40.  Its 52-week trading range is $22.07 to $31.38.

Cramer likes Saks (SKS) as the first pick.  Cramer thinks that once retailers tank, they stay down and dormant.  Cramer thinks the first pick won’t even be public in a year, but if so he thinks it goes higher. 

Jon C. Ogg
January 10, 2007