Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday February 6.
Hain Celestial (HAIN) has pulled back recently, down 2.3% after a quarter that was perceived as not as strong as expected. The stock is 16 points off its high, and management lowered guidance. However, CEO Irwin Simon pointed out that organic growth has not declined, and 16 of the company's brands are up double digits. Celestial Seasonings has had its strongest quarter on record. While Barron's published an article discussing the fact that Hain might be facing stiff competition, Simon pointed to the strength of Hain's brands. The perceived increase in competition is the result of the fact that many people are making lifestyle changes, and not embracing healthy eating just as a temporary fad. Hain recently acquired a vegetarian food company in the U.K.; "We are doing major work in the U.K.," said Simon. Whole Foods (WFM), which carries many Hain products, is expanding its store count, and Hain's brands are appearing on the shelves of an increasing number of supermarkets. Organic growth in the U.S. is up 10%, earnings per share increased 55%. Major shareholder, Carl Icahn, has "been very supportive," according to Simon. Cramer thinks Hain is finally giving investors an entry point to buy the stock.
The CEO Quotient: Disney (DIS)
Cramer discussed an implied metric that should be taken into account when gauging the value of a stock; the CEO quotient. Disney CEO Bob Iger is a CEO who deserves the faith of investors. Disney reported a quarter that was "not perfect" in the eyes of The Street. Analysts were concerned about the future of ESPN. Disney's stock plummeted from $53 to $47, but then rebounded by a greater margin when Iger explained the prospects for Lucasfilms, including new Star Wars products. ESPN is set up for robust growth in 2013, and is running 7% ahead so far this year. Disney's theme parks will include new rides and innovative products to improve the experience for visitors. Bob Iger's comments were the main reason the stock rebounded, and demonstrated that it often takes an inspiring CEO to rescue a stock from a sell-off.
Eyes Open For Opportunities: Netflix (NFLX), 3M (MMM), Allergan (AGN), Chipotle Mexican Grill (CMG), Cummins (CMI), Biogen (BIIB), Elan (ELN)
Cramer discussed opportunities that alert investors could have taken advantage of on Wednesday. Viewers would have made a lot of money if they had bought Disney into earnings prior to its announcement of its partnership with Netflix (NFLX). Analysts were not expecting much from 3M (MMM), but Cramer says they weren't paying enough attention to 3M's product line or its CEO, Inge Thulin, who took the helm last year, and is "not a promoter, he's an operator." When The Street realized 3M's good news, the stock rose $1.50. While Allergan's (AGN) CEO, David Pyott, is usually conservative, the CEO was very forthcoming about the positive prospects for the company, including an inhaled migraine treatment. Investors in AGN saw a $1.50 rise in the stock price. Chipotle Mexican Grill (CMG) no longer delivers double-digit same store sales, but this metric was up 4%. Many were negative on the news of CMG's price increases, but the bears did not take into account that CMG customers may be willing to pay higher prices for CMG's quality cuisine. On news that Cummins (CMI) was guiding down, many would expect the stock to get dinged, but since many are rightfully hopeful about the second half of 2013, and aren't so troubled by slightly lowered guidance short term, the stock traded up. Those who hold shares of Biogen (BIIB) could have "sold the news" after the announcement that the company is buying Elan (ELN).
Has McCormick (MKC) Lost Its Spice?
McCormick (MKC) is one of the most recognizable names in the spice industry and takes up substantial aisle space in most supermarkets. The company also has huge market share in private label spices. The stock has given a sizeable return, 241% for the last decade (including reinvested dividends) and yields 2.15%. Cramer has been bullish on MKC for a long time, but one ongoing problem with buying the stock is that it is hard to find a good entry point, since it keeps climbing higher. However, Cramer thinks MKC might be a buy at its current level, $60, four points down from where it was trading two weeks ago before earnings. The company missed earnings estimates by 3 cents, reported revenues that were not as strong as expected and lowered guidance.
"Why the heck are you recommending a stock that missed its numbers?" Cramer asked rhetorically. First, MKC has a long history of strong performance and there is no reason to think it can't catch up. Second, MKC sold off after 5 of its 7 past quarters, and the pullbacks were always significant buying opportunities. In one case, the stock fell from $39 to $30 after earnings, and was a "much more problematic sell-off" than the current one; those who bought MKC on the decline made money in the stock. Hurricane Sandy, which caused disruption in transport and the closing of supermarkets, did hurt MKC, but the company has reported strong sales so far in 2013. Earnings might take a hit from a non-cash pension expense, but the same is true for other companies. In addition, MKC continues to innovate, and has released 25 new products so far in 2013. The stock trades at a high multiple of 19, but the current pullback brings down MKC's price tag.
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