Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday July 29.
Are Merger Mondays Back? Omnicom (NYSE:OMC), Perrigo (NYSE:PRGO), Elan (NYSE:ELN), Saks (NYSE:SKS). Other stocks mentioned: Google (NASDAQ:GOOG), Facebook (NASDAQ:FB), Tesla (NASDAQ:TSLA), Dell (NASDAQ:DELL)
There has been a dearth of mergers in 2013, partly due to the dramatic run-up in stocks. In a bull market, some suspect the underlying companies are overvalued. In addition, despite the market rally, many lack confidence in the long-term health of the economy, and business owners are making acquisitions with caution. However, on Monday, three mergers were announced: that of Omnicom (OMC) and Publicis, Perrigo (PRGO) and Elan (ELN) and Hudson's Bay and Saks (SKS). The OMC/Publicis merger unites two advertising powerhouses under one roof. Many are going to Facebook (FB) and Google (GOOG) directly for advertising, and while OMC and Publicis can't arrest this trend, they can at least join forces. The main advantage in Perrigo's acquisition of Elan is that the latter, located in Ireland, provides PRGO with tax advantages. Hudson's Bay's purchase of Saks will enable both to expand their high end footprints.
Cramer took some calls:
Tesla Motors (TSLA): Cramer clarified his position on TSLA. He didn't say it wasn't a buy, he said that it is a cult stock, and therefore, it tends to trade on emotion rather than on fundamentals.
Dell (DELL) is a sell.
CEO Interview: Thomas Quinlan, R.R. Donnelley & Sons (NASDAQ:RRD)
Cramer recommended R.R. Donnelley & Sons (RRD) last month, and since then, the stock has jumped 25%. RRD has a bullish story, even though it is in an industry, printing, thought to be in secular decline. RRD's advantage is in its market share and diversification. It has major names in the financial industry as clients, and RRD makes bank statements, quarterly earnings reports, and also prints phone books. RRD is lowering its exposure to pure printing and has an e-book business, LibreDigital. CEO Thomas Quinlan says print is not going away entirely, and RRD has the advantage as the leader in printing.
Starbucks (SBUX) reported a nearly flawless quarter, and Cramer described what made Starbucks' earnings so perfect. Same store sales grew an astounding 8% domestically and 9% worldwide. CEO Howard Schultz admitted that he doesn't expect quite that level of same store sales increases to repeat, but the trend is strong. SBUX reported 13% revenue growth, significant margin expansion at 150 basis points or 64%, which is a record for the company. SBUX keeps producing and developing new concepts like baked goods, Teavana and healthy eating options.
Cramer took some calls:
Bloomin' Brands (BLMN) has had a big run and is not Cramer's pick in the restaurant space.
CEO Interview: Dennis Gallagher, Student Transportation (NASDAQ:STB)
Student Transportation (STB) handles a third of all school bus transportation in the U.S., and is a play on privatization. Since the company is based in Canada, there are special tax considerations to take into account when buying the stock. STB buys up "Mom and Pop" school bus companies, and has a large amount of cash to make these acquisitions and to pay a generous dividend. STB is using alternative fuels to power many of its buses, and CEO Dennis Gallagher expects to increase the number of "cleaner" buses with the adoption of vehicles with engines that run on alternative fuel.
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