GRMN: Cramer is wrong
I don’t agree with Cramer’s thoughts on Garmin.
RIMM’s BlackBerry is “a more necessary product” than the global-positioning systems Garmin manufacturers and sells, he said.
In addition, Garmin’s market is “mostly penetrated,” whereas RIMM is expanding its product base to a broader market than just business people, with its Blackberry Pearl smartphone.
“RIMM has the capacity to grow, which Garmin lacks,” Cramer said.
Here’s why I think he’s wrong. Each user will only have 1 Blackberry at most, yet depending on interests, can have multiple Garmin units. I, personally, have 3:
- Forerunner, for running
- StreetPilot, for driving
- eTrex Vista, for geocaching
IF I get a Blackberry, which I’ve been thinking of time & time again, I’d only get one of them, not 3. In addition, I don’t know how Cramer can say the GPS market is “mostly penetrated” – there are plenty of people who could use a Garmin GPS unit, who do not have one yet, and as production prices drop, they’ll be more affordable to entirely new markets.
Also, Garmin just announced they’re entering the Location Based Service market, creating a whole new group of customers. Look for more market openings in 2007.
For now, I’m sticking with GRMN; looking to sell 19 shares at 63.13, then 20 at 70.00.
I don’t follow analysts’ thoughts on any stocks, let alone a guy whose name sounds like a Seinfeld character. Their earnings estimates are so far off I could do a better job picking a number by throwing darts at random. I don’t know much about Garmin nor Blackberry. But based on the little knowledge I know, they are not competitors. I don’t see how owning a Garmin will make you not want to own a Blackberry and likewise. Thus, I doubt an increase in demand for Blackberry will result in a decrease in demand for Garmin unless Blackberries also tell you where you are.
Anyway, I’m curious as to why you are selling a portion at $X and another at $Y. The only reason I could think of (after reading your comment about selling when a stock reaches its price target) is you probably purchased a portion at say 80% of $X and 80% of $Y, which means you’ll make a healthy 20% profit off each portion. Assuming my guess is right, I would have chosen to sell differently. If I was confident the stock will reach $70, I would sell all at $70 versus $63.13. Why limit myself to a 20% gain when I can get more than that if I sell at $70?
Ye,
You’re right – they’re not mutually exclusive. I think what Cramer’s saying, though, is if you had some money to invest, which would be the best pick.
I have 2 positions with GRMN now – the stock tanked after last earnings report, so I bought up some more at 46.61. This is the one I’m looking to dump after a 33% rise, and hold my original position.
My original purchase (at 33.58) I’m looking to hold for the long-term BUT, I’ve learned it’s better to make some money, than none at all. So I’ll be selling enough to cover my original purchase if/when it hits $70.
While I may lose out on future income, I’d rather cover my purchase, and find another company to invest in. If the stock continues to go up, then I still have some shares (essentially, my “profit”) that benefits from the rise.
Eric,
Thought you would be interested in reading this about Cramer. http://www.cramerwatch.org/