Cramer's Mad Money - 4 Mergers Ahead Of The Fiscal Cliff (12/20/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday December 20.

NYSE Euronext (NYSE:NYX), Intercontinental Exchange (NYSE:ICE), Oracle (NASDAQ:ORCL), Eloqua (NASDAQ:ELOQ), Gardner Denver (NYSE:GDI), SPX Corporation (SPW), Alterra (NASDAQ:ALTE), Markel (NYSE:MKL), eBay (NASDAQ:EBAY), MasterCard (NYSE:MA), Discover (NYSE:DFS), Berkshire Hathaway (NYSE:BRK.B)

Even with uncertainty in Washington, companies are not waiting around for a compromise to the fiscal cliff, but are showing initiative by making acquisitions. NYSE Euronext (NYX) is being taken over by Intercontinental Exchange (ICE). The unified company will be a global powerhouse that will dominate futures trading. Oracle (ORCL) announced it is buying Eloqua (ELOQ) not long after its IPO at double its opening IPO price. Gardner Denver (GDI) was a weak stock this summer, given its European exposure, but it is going to be sold to SPX Corporation (SPW), and GDI is now up 25 points from its bottom this summer. Alterra (ALTE) and Markel (MKL) are consolidating. Cramer thinks these recent acquisitions are signs of confidence, in spite of the economy.

Cramer took some calls:

eBay (EBAY) is a stock Cramer likes, particularly because of Paypal. However, his favorite in the segment is MasterCard (MA) even though it is at a 52 week high, and after MA, Cramer likes Discover (DFS), but he warns that DFS has had a large run.

Berkshire Hathaway (BRK.B) is a "dead-on great buy." The "B" shares allow investors to "get Warren Buffett, the greatest investor in our time, pretty cheap."

CEO Interview: Marti Mucci, Paychex (NASDAQ:PAYX)

Paychex (PAYX) is a read on the health of small businesses. The company reported in-line earnings with weaker than expected revenues. PAYX reaffirmed guidance, but lowered its growth forecast. CEO Marty Mucci said that small business owners are delaying spending and hiring until there is a clearer picture of what exactly is going to happen with the fiscal cliff. In addition, Hurricane Sandy impacted 20% of PAYX's clients. Cramer's advice to investors is to let the 4.8% yield "pay you to wait" for the stock to go higher once there is more information about tax and national spending issues.

CEO Interview: Tim Main, Jabil Circuit (NYSE:JBL)

Jabil Circuit (JBL) is a strong indicator of the health of tech, and assembles many products, including handsets for cellphones, iPhone cases and networking and medical equipment. Jabil reported a 5 cent earnings beat and revenues that increased 7.2%. The stock rose 7.4%, and may have more room to run. Tim Main, who is stepping down as CEO for the position of Chairman of the Board is "the must bullish I have heard you in 8 or 9 quarters," commented Cramer. Main said Jabil's advantage is in its diversification. Manufacturing margins are up 50 basis points quarter on quarter. Handsets were particularly strong, but there was weakness in set top boxes. Main is confident that JBL will continue to take market share.

CEO Interview: Farooq Kathwari, Ethan Allen (NYSE:ETH)

CEO Farooq Kathwari discussed the success of Ethan Allen (ETH), which has recovered solidly since the great recession. The company recently saw gross margins increase from 50-55% quarter over quarter. ETH has a new factory in Mexico, and Kathwari emphasized that the company is adhering to high environmental standards. ETH has several factories in the U.S. and ships goods to China, which is a strong market. The company is hiring more interior designers to improve its brand. ETH has risen 72% since Cramer got behind it in 2010 and 22% since April. The stock is 5 points off its high, and might be considered as a good housing play.


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