Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday September 16.
"I Want To Scream"
When people say nothing has changed since the fall of Lehman Brothers, "I want to scream," said Cramer. "If anyone says we are still in the too big to fail environment, I'm going to be tempted to rip that person's lungs out, metaphorically speaking." Things have changed substantially since the financial crisis; there are few bad loans and regulators are in charge. Compared to U.S. regulators, those who oversee the banks in Europe "have no spine ... give me a break, things (in the financial sector) are more sustainable than they have ever been."
The Dow rallied 119 points, not least because Larry Summers withdrew his nomination for Fed chief. What does the street have against Larry Summers? While straight talking might be a valued character trait in an acquaintance, for a Fed chief, according to Cramer, it is not a virtue. Cramer called Summers a "polar bear" because he tends to be a polarizing figure given his direct statements and that he made no bones about the fact he disapproved of the extent of Bernanke's bond buying. A Summers nomination might have meant a rollback of Bernanke's policies, and his statements as Fed chief would have created volatility in stocks. This is one reason the Dow rallied 119 points, even as President Obama emphasized upcoming negotiations about the debt ceiling.
Cramer took some calls:
Intel (INTC) is a great company and an inexpensive stock. Intel is making smaller chips that will do well. However, no one should think Intel is an aggressive growth stock, as in days of yore. However, it has a good yield and is a stable investment.
Allegheny Technology (ATI) is getting rid of one of its strongest segments: tungsten. Cramer is surprised by this, but the stock has been flat for so long, perhaps the move may produce value. Cramer thinks ATI will pull back 10%, and when it does, it is time to buy.
GOL Linhaus Areas Inteligentes (GOL): The Brazilian market has been "horrendous." Cramer would buy a domestic airline.
Packaging Corporation of America (PKG) announced it is buying Boise (BZ) at a 26% premium. PKG's stock rose more than $5 on the news. The increasing consolidation in the industry is reducing competition, and this is good news for best-of-breed International Paper (IP), which is integrating its successful acquisition of Temple Inland. IP is shutting down a mill that was not performing well and has raised the price on containerboard; it is expected to raise prices higher in the coming year. IP controls a third of the North American paper market, and while 75% of the business is domestic, it is rapidly expanding overseas. IP has issued a buyback that is 7% of its market cap. It reported an 8 cent earnings beat on stronger margins solid revenues. The company has a multiple of only 11 with a 15% growth rate.
4 Anointed Stocks for the Remainder of 2013: Netflix (NFLX), TripAdvisor (TRIP), GameStop (GME), Best Buy (BBY). Other stocks mentioned: Sony (SNE), Microsoft (MSFT), Diana Shipping (DSX), Regeneron (REGN)
At the end of the year, stocks that have been performing well achieve "anointed" status from institutional investors. Fund managers want to show their clients that they have been buying the best performing stocks, and there is a rush from the fall to winter to stock up on the hottest players. In the discretionary spending sector, Netflix (NFLX) is up 230%, Best Buy (BBY) has risen 223%, GameStop (GME) is up 109% and TripAdvisor (TRIP) has traveled up 73%.
Netflix is winning on its original content and its importance in the "binge viewing" trend, when subscribers desperately try to catch up on past episodes of popular series. Netflix is poised to expand aggressively internationally, and management believes it can raise its current number of 38 million viewers to 60 or 90 million.
Best Buy is back from the dead. It had been written off as a mere showroom for ecommerce plays. Management has been cutting expenses, turning the worst stores into warehouses and revamping existing stores.
GameStop is on the brink of a huge gaming cycle with the release of Sony's (SNE) new Playstation and Microsoft's (MSFT) new version of Xbox. GME should have a fabulous 4th quarter. It trades at a multiple of 13 with a 14% growth rate.
TripAdvisor (TRIP) has a great social media and mobile strategy and its reviews can make or break a hotel. The stock has pulled back a bit since roaring higher. It is not a cheap stock, and trades at a multiple of 32 with a 19% growth rate.
Cramer took some calls:
Diana Shipping (DSX) is best of breed in the shipping space, and although it has had a sizable move, it can go higher long term.
Regeneron (REGN) has great drugs, including an anti-cholesterol drug that doesn't produce the side effects of the competing drug on the market. It should dip, and when it does, it is a buy.
CEO Interview: Brian Sharples, HomeAway (AWAY)
The world's largest place on the web for vacation rental space has had a rocky history since its IPO 2 years ago, however, it is making a change that might be a catalyst. Until now, 85% of its revenues came from subscription fees. This tended to discourage those who only wanted to rent property a few weeks a year and didn't want to buy a full subscription. CEO Brian Sharples explained a new business model which provides the option of per booking fees, and hopes those who opt to pay these booking fees will eventually buy subscriptions. Cramer thinks AWAY could be a good opportunity.
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