Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday November 27.
Off the Charts: Banco Santander (SAN)
Banco Santander (SAN) is a “tell” on the European economy. Cramer noted the stock bottomed over the summer, and with the help of Tim Collins, technical analyst of TheStreet.com, discussed, according to the charts, where the stock may be headed next. Banco Santander appears “ready to roar,” just short of breaking out. The Relative Strength Index is showing a rounding bottom. If it holds above $7.25, Collins thinks it can rise over $8. The chart also shows a crossover pattern. When this was seen in the past few months, it was usually a sign to buy. The weekly chart shows a rounding bottom pattern, which has usually preceded a breakout. Collins thinks investors can put in a position, because after $8, the next move could be $10. Cramer thinks this might be a sign that the European situation may improve. CEO Interview: Emmanuel Chirico, Phillips Van Heusen (PVH). Other stock mentioned: Warnaco (WRC)
Almost a month ago, Phillips Van Heusen (PVH) announced it was acquiring Warnaco (WRC) for $2.9 billion to unify the Calvin Klein brand under one roof. PVH reported an earnings beat of four cents, strong gross margins, and the company raised guidance. While Hurricane Sandy negatively impacted sales in the first part of November, CEO Emmanuel Chirico said the storm didn’t prevent the company from guiding up, with revenues expected to rise by 7% on the strength of holiday sales.
The continued popularity of the Calvin Klein brand worldwide and the acquisition of Warnaco should drive growth. Management is taking advantage of low interest rates to secure leverage and grow its business:
If you are smart about it and you look at the historical levels of where the interest rates are, we could borrow at low rates now. we can use it as a weapon to grow our business and brands.
Asia is a fast-growing market for PVH, and generates around 15% of its revenues; Latin America is growing. When asked if the fiscal cliff will affect business, Chirico responded:
Great brands command higher prices and drive consumers. We are all about taking the brands growing those businesses globally.
Concerning the U.S. consumer, he added:
The U.S. consumer for the holiday season seems to be in good shape.
CEO Interview: Gary Rodkin, ConAgra (CAG). Other stock mentioned: Ralcorp (RAH)
ConAgra (CAG) is one of the leaders in the private label space and is consolidating its position by acquiring Ralcorp (RAH). CEO Gary Rodkin discussed the increasing presence of CAG brands in stores, and the company's $1 billion share in the private label business. One challenge for CAG is to avoid competing with itself, with the concern that its private label brands will take market share from its branded products. CAG has a hold on regional brands, like Pennsylvania Dutch noodles. Rodkin discussed the challenge of commodity prices, which it has managed to deal with through its large scale and diversification.
“ConAgra is going higher,” said Cramer. “I like this acquisition very much.”
Amazon’s (AMZN) and Best Buy’s (BBY) debt are not created equal. Best Buy is trying to raise cash so it can take itself private. This move is inspired by the company’s poor performance of late, and the goal is to reform it and send it public again in a more forgiving environment. Amazon announced a $3 billion bond offering, but this is to enable the internet giant to expand even more dramatically. The purpose of Best Buy’s debt is that it can be taken private and shrink; Amazon’s leverage will allow it to grow.
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