Jim Cramer's Mad Money In-Depth Stock Picks, Sept. 26

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday September 26. Click on a stock ticker for more analysis:

Walgreen (WAG) vs. Wal-Mart (WMT)

Although Walgreen went to $45 on Tuesday the stock is being "condemned" according to Cramer because of the dire prediction that Wal-Mart's lowering prices on generic drugs will devastate the company. Although Cramer sees a "slight decline" in this area he adds that WAG is a broken stock and not a broken company and demonstrates this by pointing out that WAG would be a $70 stock if it were given the same multiple as Pepsi (PEP) and would sit at $72 with Coke's (KO) multiple. He concludes that WAG is a cheap stock which is poised for growth.

Related: David Jackson reports that WAG executives are not concerned about Wal-Mart's low-priced generic drugs.

Overlooked IPO: DivX (DIVX)

Cramer likes this "overlooked IPO" which has grown 17% since it has gone public and he believes that DivX will continue to move up. The company produces software for video compression and decompression and Google (GOOG) purchases 18% of its product; "We love Google and anything connected to Google," says Cramer who notes that there will be a bandwidth shortage soon. Cramer also likes DivX because 80% of its revenue is from licensing fees, it has a gross margin at 89% and its revenue has doubled in three years. Although this company is small and is almost "off the radar screen" Cramer thinks it could be the next Akmai (AKAM).

Related: Bill Simpson takes an in-depth look at DivX's IPO.

America Movil (AMX), Google (GOOG), Apple (AAPL), Genentech (DNA), Johnson & Johnson (JNJ) and Schering-Plough (SGP)

Cramer made a search for stocks with more than a $50 billion market cap, one year's earnings-per-share growth of at least 25% and at least 20% expected growth and came up with AMX, GOOG, AAPL and DNA. Of the four, DNA was the cheapest and according to Cramer "has the most upside and potential here by far." DNA is close to its 52-week low for "not-so-important, short-term reasons," and is Cramer's favorite drug stock apart from JNJ and SGP. Cramer is bullish on Genetech because he believes that it could have as much as a 31% growth rate, and that the FDA will approve three of its new products: Rituxan, its drug for non-Hodgkin's lymphoma, Herceptin and Avastin, a lung cancer drug which should double its sales.

CEO Interview: Stuart Miller, Lennar (LEN)

When Cramer asked him why the stock was going up, Stuart Miller responded, "We're talking about being primarily focused on our balance sheet, keeping our inventory levels low and recognizing that the market is a little or a lot soft right now, but we're preparing for what happens when the market turns around." Cramer pointed out that at this point in a cycle, it is normal for the debt to total capital rate to spike, and Miller said that it was at 31.9% down from last year's 37%. Stuart Miller concluded by saying that the high inventory is "going to correct in due time, which is why we think liquidity is king."

Related: Evelyn Rubin points out that Lennar is lowering its fourth quarter outlook.

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightening Round, Stop Trading and his Radio Show.

Get Cramer's Picks by email -- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with CNBC, Jim Cramer or TheStreet.com
Comment on this Article