Cramer's Mad Money - Is This The End For Herbalife? (1/17/13)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday January 17.

Play The Temp Trend: Kelly (NASDAQ:KELYA), Manpower (NYSE:MAN), Robert Half (NYSE:RHI)

Temporary staffing companies may go higher on worries about impending Obamacare and the need to give benefits to full-time employees. The number of temps increased by 6.2% in 2012 and is expected to rise. While Kelly (KELYA) and Manpower (MAN) are two strong companies in the temporary staffing space, Cramer prefers a company that hires higher skilled workers, like IT specialists, accountants and engineers, because high-skilled labor is a higher margin business for these companies. Cramer's favorite pick in the space is Robert Half (RHI), which trades at a multiple of 19 with a 20% growth rate. Cramer thinks Robert Half has plenty of upside.

Is This The End For Herbalife (NYSE:HLF)? Other stocks mentioned: Dole Foods (NYSE:DOLE), Hain Celestial (NASDAQ:HAIN)

Herbalife (HLF) is a company attracting plenty of controversy lately over the accusation that it is nothing more than a pyramid scheme and doesn't offer a worthy product. Others say Herbalife is a legitimate business. Cramer doesn't think the company will be destroyed unless the Justice Department makes a full-scale investigation of the company, and he doesn't see that happening. Herbalife beat its earnings and is making a lot of money; if it weren't for the negative headlines, Cramer would be a buyer, but given the fact that HLF is a battleground stock, he would stay on the sidelines.

Cramer took some calls:

Dole Food Company (DOLE) got hit hard, and Cramer is surprised by the decline. Cramer would buy rather than sell the stock.

Hain Celestial (HAIN) is a stock Cramer recommends; "CEO Irwin Simon is money."

Mad Mail: Ironwood Pharmaceuticals (NASDAQ:IRWD), Santarus (NASDAQ:SNTS), Hovnanian Enterprises (NYSE:HOV), Nordic American Tankers (NYSE:NAT), Prudential (NYSE:PRU), AIG (NYSE:AIG), Darden (NYSE:DRI) Southern Company (NYSE:SO), Pfizer (NYSE:PFE), Toll Brothers (NYSE:TOL)

Ironwood Pharmaceuticals (IRWD) has a medicine for irritable bowel syndrome, and it is too early to tell how well it will do. The stock has rallied, so it is risky. Cramer prefers Pfizer (PFE) for a more conservative investment.

Santarus (SNTS) is a small speculative biopharma with a treatment for type 2 diabetes. The stock is up 170%, but is trading at only a slight premium to its growth rate. The stock could still run ahead of the release of its colitis drug.

Hovnanian (HOV) will benefit from the housing rebound, but Cramer prefers Toll Brothers (TOL).

Nordic American Tankers (NAT) is a stock Cramer has walked away from. Some people see a bottom on the news it slashed the dividend, but Cramer thinks it is risky.

Prudential (PRU) is a good company, but Cramer prefers AIG (AIG) which is less expensive. Cramer would buy it at $35.

Darden (DRI) is not so well-run, and Cramer would stay away for at least a few quarters.

Southern Company (SO) is a good stock to hold onto.


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