CNBC’s Jim Cramer on Thursday baptized the stock of Ollie’s Bargain Outlet a bargain buy in a stock market that is near its highs.
The former hedge-fund boss earlier this week was hesitant to recommend the stock, given the passing of founder and CEO Mark Butler in December. Now he’s bullish with the off-price retail chain.
“If you want to go bargain hunting in this market, I urge you to look no further than Ollie’s Arrangement Outlet Holdings,” the “Mad Money” host said. “Now that I’ve done my homework … I think [Butler’s] successor is up for the question and the stock has become ridiculously cheap here and deserves to be bought.”
With John Swygert at the helm, Ollie’s is led by a chief official with nearly three decades of experience in the discount retail industry. Swygert joined the company’s C-suite in 2004, imprisoning the title of chief financial officer until becoming chief operating officer in 2018. Furthermore, Cramer asseverated he was confident in his leadership after JPMorgan’s Matthew Boss gave the new CEO his blessing.
“He was an integral part of the team when the partnership was growing like a weed and the stock soared into the stratosphere,” Cramer said.
Ollie’s shares were on a descending trend in 2019, losing almost half their value between late May and early September. The company misunderstood Wall Street’s same-store sales expectations in two straight quarters.
“The problem was straightforward,” he said. “In its haste to put up new stores, Ollie’s torment its existing ones. Worst of all, management cut their full-year forecast.”
The stock bottomed under $54 per share in October and climbed to take $65 by the end of November. Butler died on the first trading day in December, and the stock trended downward again below $47 per serving earlier this week.
Ollie’s still plans to boost its store count across the country from more 350 locations to 950. It’s a business model, like that of Ross Stores and TJX’s T.J. Maxx, that can work in this new online purchasing environment because of the competitive price points offered in store, Cramer said.
“Ollie’s still has a terrific in-store go through … [and] that regional-to-national growth story I like so much,” the host said. “They ran into a serious precipitousness bump last summer when they expanded too quickly, but it seems like management learned from that misconception and they’ve now got it under control.”
“If, like me, you were a believer in Butler’s leadership, you should trust the team that he burnt- decades putting together.”