Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday May 22.
CEO Interview: Jim Reid-Anderson, Six Flags (SIX)
Six Flags (SIX), the largest theme park operator in the U.S., has given investors a 38% return since Cramer spoke to the CEO, Jim Reid-Anderson, last July. SIX yields 4.6%, and the company returns 100% of its profits to shareholders. SIX is introducing the world's tallest swing ride, has successfully promoted its brand through e-commerce and gets 44% of its sales through season passes. SIX issues a special season pass that allows customers to skip long lines for a higher fee. The stock has run 28% since the beginning of the year, but, in spite of the fact SIX has run, Cramer thinks the dividend and potential upside are appealing.
Jim Reid-Anderson discussed the immense barriers to entry that allow SIX to dominate the space. Not only is building a theme park expensive, but the government is less likely to approve such plans now than in the past. The company has the highest margins in the industry and the net leverage is the lowest. SIX enjoys the luxury of a low tax rate and does well in any economy; in a slow economy, Six Flags is a bargain one-day vacation, and in a strong economy, it is a fun way to splurge. "You have done a miraculous job," said Cramer, and he mentioned that there was a time when he didn't want to have Six Flags on Mad Money because the company was so poorly run before Reid-Anderson took the helm."This has the model of dreams."
EOG Resources (EOG), Ford (F), AutoZone (AZO), Wal-Mart (WMT), Target (TGT), General Electric (GE), Boeing (BA), Biogen (BIIB), Celgene (CELG), Gilead (GILD), Regeneron (REGN), iShares Silver Trust ETF (SLV), iShares Gold Trust ETF (GLD), Pfizer (PFE), Zoetis (ZTS), Lowe's (LOW), Home Depot (HD)
The market soared on Fed Chairman Ben Bernanke's press conference during which he said he would continue buying bonds and keeping interest rates low. However, later in the day, minutes from a few months ago were released that questioned the need for continuing to keep rates low. The contradictory information (even though the minutes were old news) created a roller coaster for stocks, and the Dow closed down 80 points. Cramer thinks if the day had begun with the minutes and ended with the press conference, stocks might have finished in positive territory.
Wednesday's Dow drama can lead one to conclude that the Fed has an incredible influence on stocks. However, Cramer says the Fed is only part of the picture. Many things that have nothing to do with the Fed are moving stocks. The housing recovery, the oil drilling boom, the pent-up demand for autos, the success of biotechs make the following stocks attractive: EOG Resources (EOG), Ford (F), AutoZone (AZO), General Electric (GE), Boeing (BA), Biogen (BIIB), Celgene (CELG), Gilead (GILD) and Regeneron (REGN). However, disappointing numbers from Wal-Mart (WMT) and Target (TGT) show that the consumer is still strapped for cash and might indicate the economy is not yet strong enough to justify raising interest rates.
Cramer took some calls:
CEO Interview: Alan McKim, Clean Harbors (CLH)
When disaster strikes, Clean Harbors' (CLH) stock tends to go higher. It is a sad fact, but natural disasters and spills are catalysts for CLH, which played a significant role in cleaning up the Gulf of Mexico oil spill 3 years ago and Hurricane Sandy. The recent tornado in Oklahoma, which has displaced 10,000, has produced hazardous waste that CLH is cleaning up. The stock has risen 73% since Cramer got behind it in 2010 and rose 10 points following Hurricane Sandy. The company also provides clean-up services to the oil and gas industry. CLH beat earnings by 6 cents, but revenues came in a bit below expectations, even though they were up 50%. Management cut revenue guidance and the stock tumbled, but has recovered to a level above where it was when it reported. CEO Alan McKim discussed building incinerators and a new facility that should add 10% more capacity. As more companies outsource their waste disposal, McKim expects increasing demand long-term.
Whole Foods Market (WFM)
Younger people demand verification that their food is healthy, and there is a huge resistance to growth hormones and other food innovations. Whole Foods (WFM) is a play on the increasing health consciousness of the younger generation. The stock shot up 10 points after a successful earnings report and another 3 points the next day, before falling slightly on Wednesday. After its previous quarter, analysts were worried about increasing competition from regular supermarkets stocking more organic food. However, WFM has indicated that there is room enough for everyone as the healthy eating trend has legs and an increasing number of adherents. WFM can increase its store count by over 1,000 locations in the U.S. and still not be saturated. WFM's stock is going to split 2 for 1. Cramer expects many years of multiple, as well as store, expansion.
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