Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday October 7.
Gridlock Survival Guide: Dominion (D), ConEdison (ED), Southern Company (SO), Pfizer (PFE), Campbell's Soup (CPB), Altria (MO), Verizon (VZ), Ventas (VTR). Other stocks mentioned: J.C. Penney (JCP), Humana (HUM), Molina (MOH), Triumph (TGI), Boeing (BA)
The Washington-inspired lunacy has made many run for cover, but Cramer thinks there are stocks to buy in the painful downturn ahead. He would look at high-yielding stocks with strong balance sheets in sectors that tend to do fine during a slowdown:
Dominion (D) yields 3.6%, is starting an MLP and has exposure to natural gas.
ConEdison (ED) has a 4.5% dividend that may go to 5% on a decline. It is a play on the switch from oil to cheaper natural gas.
Southern Company (SO) yields 5% and is a consistent performer.
Pfizer (PFE) has spiked, but is likely to decline, given the current climate. Its earnings were strong and it is likely to raise its dividend.
Altria (MO) is a consistently high-yielder.
Verizon (VZ) just bought the rest of Verizon Wireless and is a buy when the stock price drops so that it yields 5%.
Ventas (VTR) yields 4.5% and is the best of the healthcare REITs.
Campbell's Soup (CPB) is a serial dividend raiser and could get a takeover bid.
Cramer took some calls:
J.C. Penney (JCP): "I've lost my faith in it," said Cramer. He is unhappy that management said everything was fine and then issued equity.
GameStop (GME) amazed the Street with strong earnings when analysts assumed the gaming console industry was in secular decline. CEO Paul Raines predicted the comeback and bought shares on the cheap. The company beat earnings estimates by 5 cents and reported strong revenues. The stock has doubled since the beginning of the year on the new gaming cycle, ushered in by Microsoft's (MSFT) release of its new Xbox. The reason customers go to Gamestop and not to more generic retail stores to buy games is that the GME staff is knowledgeable about the games they sell. GME has a strong presence in Europe where it is one of the top American retailers. GME puts up new stores in places where there are not already Apple (AAPL) Stores, and this has been a good strategy. Paul Raines sees the industry growing by 20-30% next year. Cramer thinks GME is one of the fastest growing retailers.
Noodles & Company (NDLS) and Potbelly (PBPB) were hot IPOs that more than doubled. NDLS rose 104% its first day of trading and has increased another 19%, and Potbelly rose 120% the day of its IPO and has gone higher. One driver of growth for both is the fact that they are regional to national stories. However, investors may balk at their sky-high multiples; NDLS trades at 81 times earnings and Potbelly trades at 80. However, some might say the strength of a concept overrides concerns about high multiples. Noodles is growing stores more aggressively than PBPB at a rate of 14% compared to Potbelly's 10%. Noodles' same store sales were 4.4% compared to PBPB's 2.3%. Cramer thinks the noodle concept is more original than PBPB's sandwich specialty. However, Cramer thinks both have multiples that are excessively rich. While Noodles might be the stronger stock, its multiple is more than double its 28% growth rate; a cardinal rule is never to buy a stock trading at more than twice its growth rate. Cramer would take gains in PBPB, ring the register on half of NDLS and buy the position back when the price falls substantially.
Cramer took some calls:
Buffalo Wild Wings (BWLD): The caller got a double in the stock. Cramer would take half off the table and let the rest run.
Cracker Barrel (CBRL) is a winning stock with a strong buyback. Cramer thinks it goes higher.
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