In his first "Executive Decision" segment of Monday's Mad Money program, Jim Cramer spoke with Jeremy Andrus, CEO of backyard grill maker Traeger (COOK) , which recently reported strong sales but weaker-than-expected earnings due to rising costs.
Andrus said you just can't beat the taste from a wood-fired grill and Traeger has made it easy to enjoy in your own backyard. He explained that Traeger grills make it easy to hold a constant temperature.
When asked about their earnings miss, Andrus placed the blame squarely on transportation costs. Traeger is averaging $10,000 per container as it scrambles to adjust its supply chain. The company is working on a facility in Mexico and is also exploring manufacturing opportunities in the U.S.
Traeger is also expanding into new services and technology, including wireless meat probes that connect to the cloud. It is also testing meal delivery boxes that provide everything you need.
Let's "taste" a couple charts.
In the daily Japanese candlestick chart of COOK, below, we can see a limited amount of trading history. The stock rallied for a few days after its IPO and then began a decline in August. The large number of red (bearish) candlesticks is hard to ignore. The slopes of both the 20-day and the 50-day moving averages are negative.
The trading volume has been light but the On-Balance-Volume (OBV) line has been in a decline and tells us that sellers of COOK have been more aggressive. The 12-day price momentum study in the lower panel is not giving us a bullish divergence as the pace of the decline has not slowed yet.
In this daily Point and Figure chart of COOK, below, we can see the decline and that the software has projected a downside price target in the $7 area.
Bottom-line strategy: I might want to try out a Traeger grill (we usually grill our Thanksgiving turkey outside to make room in the stove for everything else) but I would avoid purchasing shares in the company. Wait for a bottom to be hammered out.
