Cramer's Mad Money - Hard Times, Beer and Casinos (10/2/09)

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Includes: AAPL, BA, BUD, COST, FDO, GIS, MO, MON, MOS, OREX, PG, TAP, TER, VVUS, WMS-OLD, XLNX, YUM
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday October 2.

Speculating on Gambling: WMS Industries (NYSE:WMS-OLD)

A slot-machine maker seems to be an unlikely buy in a slow economy, but Cramer sees two golden opportunities facing casinos. First, credit will become more available and casinos are likely to take advantage. Second, states are expected to relax gambling restrictions out of desperation to produce more revenues.

The average slot machine lasts ten years, but because of the credit freeze, many casinos have been using old machines; WMS will benefit from renewed spending. In addition, Pennsylvania, Ohio and Illinois are expected to relax gambling rules and to add more casinos. Of all the slot machine makers, WMS takes market share and it beat estimates in its last report. While it trades at 23 times earnings, WMS' growth rate is 26%.

Cheers for Beers: InBevs (NYSE:BUD), Molson (NYSE:TAP), Altria (NYSE:MO)

Beer companies are seeing growing profits in spite of slowing sales; pricing is "up huge" thanks to consolidation which has created a "virtual oligopoly" in the beer space. With reduced raw costs, beer companies should see multi-year profits. Cramer says Molson Coors, which beat earnings estimates by 14 cents, is the best beer stock. Its joint venture with SABMiller means "major cost savings." Price increases are expected to continue even over the winter

Another way to play beer is through Altria which offers a 7.6% dividend and owns 28% of SAB Miller. Investors will gain whether or not Altria decides to sell its remaining stake in the beer company; if it does sell, Altria's share price could rise 5%.

Apple (NASDAQ:AAPL), General Mills (NYSE:GIS), Procter&Gamble (NYSE:PG), Xilinx (XNLX), Teradyne (NYSE:TER), Boeing (NYSE:BA), Yum Brands (NYSE:YUM), Family Dolllar (NYSE:FDO), Costco (NASDAQ:COST), Mosaic (NYSE:MOS), Monsanto (NYSE:MON)

With disappointment in the Dow and worries over employment, Cramer suggests buying secular growers and soft goods. These stocks held up on Friday while others fell, and Cramer thinks the trend should continue. Companies that make food and drugs are buys as well as those like Apple that aren't so adversely affected by the economy. Cramer thinks the best banks and insurers should bottom by next week, and may become "accidental high-yielders" as their dividends rise with the fall of their stock prices. However, Cramer thinks auto and home makers have some further downside before they bottom.

Cramer discussed some earnings to watch. General Mills, which rose substantially after its pre-announcement in September, sits at a mere $63 because of market declines, but Cramer thinks it could take market share and sees gains in its stock price. While Procter&Gamble has disappointed in the past, Cramer notes it rose 4% after its September pre-announcement, and could pick up steam by its earnings October 29th.

Teradyne and Xilinx are two tech stocks whose prices are lower than they were on their pre-announcement, and Cramer sees some potential upside. Finally, he predicts a new cycle for aerospace and thinks investors should buy Boeing ahead of the Dreamliner release, which should happen by the fourth quarter. Cramer says aerospace is a multi-year trend.

Other company's earnings Cramer would pay attention to include Yum Brands, Family Dollar, Costco, Mosaic and Monsanto, since these stocks are "tells" on their respective sectors.

Mad Mail: Vivus (NASDAQ:VVUS), Orexigen Therapeutics (NASDAQ:OREX)

In response to one viewer's question about manufacturing in the U.S, Cramer said the government should concentrate on creating jobs before healthcare and cap and trade reform. He told another viewer that Vivus and Orexigen were too speculative.

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