Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday April 18.
The world's largest purveyor of snacks (thanks to Frito Lay) and the second largest beverage maker, PepsiCo (PEP) beat earnings by 7 cents and reaffirmed guidance. The company has been able to raise prices and still see growing sales. It has bountiful cash flow and double-digit earnings per share growth. "These are the best numbers I have seen from any food company," said Cramer. The stock has rallied 19% so far this year. CEO Indra Nooyi discussed the ways in which she has transformed the company to reflect global diversity and the desire for healthier snacks. Through this transition period, the company still saw growth; "We performed while we transformed," said Nooyi. When Cramer asked if Nooyi envisioned acquiring more brands, she replied "we have a beautifully architected portfolio," and the focus is on growing existing businesses.
Pepsi has been remarkably astute at the use of social media, including its Frito Lay flavors taste test, which has received 2 million votes. Healthy brands, like Quaker and Tropicana, are selling as well in Asia as traditional snack foods, like Lays potato chips. The "epic battle" once was "Coke (KO) or Pepsi." Nooyi said, "Now the epic battle is completely different. It is portfolio vs. portfolio. As soon as we realize that, we'll all have much more fun."
Verizon (NYSE:VZ), Union Pacific (NYSE:UNP), Kinder Morgan Energy Partners (NYSE:KMP), Sherwin Williams (NYSE:SHW), Core Labs (NYSE:CLB), PPG Industries (NYSE:PPG), Rentech (NYSEMKT:RTK), eBay (NASDAQ:EBAY)
Cramer discussed companies whose earnings show that their managements are executing well:
Verizon (VZ) reported outstanding growth in subscriptions, and the company is able to charge more per subscriber. Verizon now has 93 million subscribers and yields 4%. The stock rose $1.37 on Thursday.
Union Pacific (UNP) has little exposure to coal, which is an advantage. The company has moved aggressively into transporting oil, and is the most important railroad in the Bakken shale. The stock rallied 4%.
Kinder Morgan Energy Partners (KMP) is committed to building out pipelines. The company is raising its distribution, and has seen a gain of 13% so far this year.
Sherwin Williams (SHW) is selling a lot of paint, thanks to the housing boom. The stock rose $4.
Core Labs (CLB) reported an amazing number, and every division is at record highs.
Pepsi is up 15% year over year on revenue growth. Pepsi rose $2.40.
PPG Industries (PPG) has sold its commodity chemical business and is focusing on high-end coating. There is strong demand for its products in Asia.
Cramer took some calls:
Rentech (NYSE:RNF) is "a good idea. It is good down here."
eBay (EBAY) was sold off because investors were stunned when management talked about a slowdown in Europe. However, in other places, eaBy discussed robust growth. Cramer would buy eBay, not sell it.
A good way to play the oil boom while oil prices have declined is with Kinder Morgan Energy Partners (KMP), which owns more pipelines in North America than any other company. It yields 5.77%, and recently raised its distribution. KMP has risen 70% since Cramer got behind it in 2007, or 150% with re-invested distributions. KMP can succeed even in an environment of low oil prices, because it is a fee-based business and is not vulnerable to price swings in the commodity. The company recently acquired El Paso and should profit from the recent Copano deal. KMP reported in-line earnings with revenues that rose 44%. "This is the best-run company in the industry headed by the smartest person (CEO Richard Kinder) in the oil patch," said Cramer.
Cramer said Kinder was "the most bullish I have ever heard him on natural gas," during the conference call. Kinder responded that natural gas has the advantages of being "cheap, abundant and here to stay." The U.S. has a 100 year supply of the fossil fuel, and KMP's footprint in natural gas assets is significant. Since it takes a long time to build out pipeline, KMP has invested in a railroad to transport the fuel in the meantime. KMP expects 6-7% growth, and Kinder mentioned that Kinder Morgan (KMI) is also a sound investment, with a 4% yield and 12% growth. KMP is planning $12 billion in expansion projects in all of the major shales. Cramer is bullish on KMP.
CEO Interview: Nick Pinchuk, Snap On (NYSE:SNA)
Snap On (SNA), which makes power tools for various industries, reported a 6 cent earnings beat, but lighter than expected revenues because of weakness in Europe. The stock fell 2%. SNA has risen 19% since the last time CEO Nick Pinchuk appeared on Mad Money. The CEO discussed how the company's technology, including a device that diagnoses problems with cars, helped offset the weakness in Europe. He expects demand to grow in China, and the company has seen success in its move into aerospace.
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