I am not Warren Buffet but I am thinking like him.
This is not a great business at a fair price. This is a low barrier to entry business at a very expensive price with little cash production trading at an inflated price.
When Cramer pumped this Tuesday night, if one listens to the way he worded the PUMP, you see how stretched it was to make it look like UA is CRUSHING it lately as a stock.
He stated YTD stock has retunrned 22% outperforming Nike but doesn;t mention the last 52 weeks, the real pedigree for performance measurement which has Nike outperforming UA by 10 points, 36 to 26.
Next, he mentions he doesn't like to mention stocks with PE's more than double the growth rate. He then says that with UA trading at a 37 pe, UA is still considered cheap. But UA's real PE is 55, and the 37 PE is more than 17 months from now and for all we know growth can slow down to the teens by then. It's a long time away.
But even if it were 37 PE, it would mean UA was trading on the high end of his measurement scale of pe to growth. But one has to pay attention to the growth rate for UA 36 months ago being 40% and today it is 23%.
I won't say the US market is satuated for UA. There is growth to be had but in 36 months from now, with UA's projected revenues of 4B, it will be harder to grow as fast. Nike isn't going to be totally replaced. I believe growth is going to slow faster than they(management or analysts) realize over the next 36 months.
UA is starting from square 1 internationally. It WILL grow and fast but not so meaningfully as people expect. This company is way ahead of itself and Cramer has this one dead wrong.
aside from the dividend, there is no reason to rush in here. There is no pricing power. Stock going down to below 25.
Buys into a fertilizer company and sends them all up. The next day after he announces, all the fertilizer stocks down 20%+!
The only one not is the one he bought into but it is still down.
Potash said to be going down $100 per ton.
HE is not suicidal. I'm sure he has a point where he knows he MUST cover and Carl Icahn is smart enough to know how to keep pushing the button.
This is market manioulation at its finest but there is nothing anybody can really do; Ackman did this to himself.
It just shows that Ackman thought he had power that he doesn't have; just say something about a company and 1)people believe it(obviously not so anymore) 2)somebody bigger and smarter can see more oppurtunity going against you than going with you(carl ICachn)
Heck...the amount of people CNBC has on the floor of the exchange makes up the majority of people there. It's like the Wizard of OZ, just machines behind the curtain.
I found this guys arguement very coherent on CNBC today. Not saying I buy it, but the only one of late laying out an arguement against this ridiculous market.
Not so shocking was SHOLE Scott Wapner being a smug SOB as this guy perfectly lays out why and how dow 5000 could happen. None of them could disprove his scenario, just smugness and scoffing and exhaling...always the greatest arguements.
But then would anybody expect any less from a guy like Scott Wapner? What has he seriously accomplished in the investing world aside from REPORTING/ on it and reading from a teleprompter which any schmuck can do.
G-d forbid somebody say something that goes against the brilliance of logical and sheep thinking that is CNBC and average joe. Never think ahead and connect the dots and go if everybody is saving nothing and globalization is eating jobs....then eventualy people are not going to have money in this country.
Carry the 1......