Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday December 21.
Blackstone (BX): An Optimist's Fiscal Cliff Play
Cramer discussed a stock for optimists who believe there will be a fiscal cliff compromise before 2013, or shortly after, at least by the Superbowl. Blackstone (BX) is a best-of-breed asset management play with hedge funds, private equity firms and real estate holdings. BX is beating the benchmarks in all categories, even in a tepid economy. The stock is up 27% in six months, and should zoom even higher if the fiscal cliff is resolved. In that scenario, people will take money off the sidelines and invest in funds. BX's private equity segment is expected to release 8 IPOs in 2013, and its real estate segment has substantial office space and hotel holdings, in addition to foreclosures. BX is "ridiculously cheap" with a multiple of 7.3 and a 19% growth rate. The reason it is so inexpensive is because of the uncertainty surrounding the economy, but those who want to bet that the uncertainty will be resolved into the best case scenario should consider buying BX. However, Cramer warned that, in the worst case scenario for the economy, BX will get hammered.
Tibco (TIBX) is a data analytics play that stumbled recently, and on December 5th, pre-announced to the downside. Management said the weakness was with its sales in the Americas. The stock fell from $24 to $19. However, the recent quarter was better than expected (given the negative pre-announcement), and the stock went up 7%, but is still down 19% since July. CEO Vivek Ranadive stated frankly that the problem was in the Americas, where it saw a 90% drop in its business with the federal government. "We had poor execution," Ranadive admitted, and said there is going to be a management shuffle to fix the problem. However, TIBX performed well in many other areas; visual analytics were up 50%, the company has made a major deal with a Spanish bank and Europe was strong. The company is working on projects with oil and gas companies to determine the best places to drill. Ranadive noted that Tibco's last miss was followed by 17 consecutive strong quarters and a quintupling of its share price. Tibco "gets the customer to make a decision while his wallet is still out," and according to Ranadive, is three years ahead of the competition. While IBM (IBM) is Tibco's strongest competitor, "we beat them in every area." Concerning Oracle (ORCL), "In our 'disaster quarter' (the recent one) we did better than Oracle in their 'victory lap' quarter."
Cramer urged viewers to do their homework and make their own decisions about Tibco. He praised the CEO for coming on Mad Money and owning up to the company's mistakes.
MGM Resorts (MGM) is a genuine turnaround story, and is the largest casino operator in Las Vegas. Prior to the recession, MGM became entangled with substantial debt obligations, and when the economic crash hit Vegas, the company swooned. Former Wall Street analyst Sheldon Adelson took the helm of MGM as CEO and began fixing the balance sheet and correcting MGM's mistakes, including the disastrous MGM Las Vegas City Center project that brought MGM on the verge of bankruptcy. Vegas has slowly been picking up, with an increase in visitation at 2% per year. These are modest gains, but for too long, there were losses. MGM, which owns 30% of hotel rooms on the Vegas Strip, is improving its dining and entertainment options and is seeing lower vacancy rates. One piece of good news is that there aren't any additional resorts expected on the Vegas strip in the next few years, and this is good for MGM's pricing. The rebound of China's economy will be beneficial for MGM, because it is one of only 6 casino operators allowed in Macau. MGM is constructing a major casino in Macau, and while completion is not expected until 2016, this move provides earnings visibility a few years out. While MGM's balance sheet still needs improvement, the company is refinancing $4.8 billion of its debt at lower rates. Cramer would wait for a pullback before buying MGM.
Cramer took some calls:
Expedia (EXPE) has announced an acquisition of a German hotel site to further consolidate business in Europe. Cramer thinks the deal is "terrific. I liked Expedia before, but I like it even more now."
Conagra (CAG) delivered an amazing number, and is a buy no matter what happens with the ficscal cliff, given its nice yield robust growth.
Abbott Labs (ABT) is going higher on its recent split-up.
Cramer would not go near the following battleground stocks:
Mellanox (MLNX) is a small semiconductor company that doubled, until it was announced the CFO was leaving for "personal reasons." Cramer usually cautions viewers to be concerned if a CFO departs for "personal reasons." Since Cramer put MLNX on the Sell Block, the stock has been hammered, and has fallen 50% from its high.
Allscripts (MDRX) is a stock Cramer told viewers to get out of because he felt it was losing too much market share to Cerner (CERN). The CEO announced that he was selling the company to bring out value, but it is never a good idea to invest in takeovers that have poor fundamentals. The stock was cut in half when the deal fell through. If the company is doing so poorly, who would want to buy it?
Herbalife (HLF) CNBC's Herb Greenberg said he didn't like HLF's business model; Cramer believes Greenberg is reliable with his analysis, in general. The stock has sold off as others have criticized HLF's operation, calling it a "Ponzi scheme."
Jim Cramer's Action Alerts PLUS: Trade right alongside a Wall Street pro! Start your 14-day FREE trial today.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.