Cramer's Mad Money - How Alan Mulally Rescued Ford (12/10/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday December 10.

Invest in America with Alan Mulally CEO Ford Motor (NYSE:F), Boeing (NYSE:BA)

Cramer continued his "Invest in America" series with the mind behind Ford Motor's (F) miraculous comeback, CEO Alan Mulally, who Cramer called "the best America has to offer." Not only has Ford remained above bankruptcy even without government aid, but it is "selling more cars than anyone would have believed a year ago."

Mulally said he used his experience as head of Boeing (BA) to remedy Ford's problems. Three years ago, he saw that Ford was focusing on its brand and was divesting itself of non-core assets. Just as he did at Boeing, Mulally aggressively raised capital and began negotiating with the unions. The competition waited until it was too late. Ford once had 97 different nameplates around the world and now has less than 20. The company's single family of cars can cater to world demand, and Mulally says Ford is returning to its original vision of providing affordable cars to everyone. He is not deterred by critics who say a union and a thriving business don't go hand in hand; Mulally says his motto is "profitable growth for all" and is working with shareholders, unions, workers and customers to realize that vision.

While Mulally supported the government's bailout of General Motors, he says the main advantage of being free of outside control is the ability to focus on the customer. Ford has paid off $10 billion in debt and has raised $1.6 billion of funding in the equity markets.

Mulally expressed his concern about American jobs, and stated "manufacturing is the soul of the country." Ford is creating more fuel-efficient engines, hybrids and electric cars to keep jobs in the U.S. and decrease dependence on foreign oil. When asked about natural gas, Mulally said the infrastructure needs to support it. Cramer says he is an admirer of Mulally and Ford.

What Analysts Should Be Saying About Retail: Apple (NASDAQ:AAPL), Best Buy (NYSE:BBY), Staples (NASDAQ:SPLS), Hewlett Packard (NYSE:HPQ), VF Corp (NYSE:VFC), Deckers (NASDAQ:DECK), Macy's (NYSE:M), Jarden (NYSE:JAH), Newell Rubbermaid (NYSE:NWL), Target (NYSE:TGT), Williams Sonoma (NYSE:WSM), Sherwin Williams (NYSE:SHW), Visa (NYSE:V), Masco (NYSE:MAS), Tiffany (NYSE:TIF), J. Crew (JCG), Home Depot (NYSE:HD), Urban Outfitters (NASDAQ:URBN), Phillips Van Heusen (NYSE:PVH)

Cramer again expressed his impatience with the bearishness of analysts and gave viewers an idea of what they should be saying. Analysts should be recommending that investors buy retail stocks, since customers are spending more than expected, especially on boots, housewares, electronics and warm clothing. Sales are strong for retailers across the board.

Personal computers, smartphones and big screen TVs are also selling well, and Cramer recommends buying Apple (AAPL), Best Buy (BBY), Staples (SPLS) and Hewlet Packard (HPQ) on this trend. Colder weather is benefiting VF Corp (VFC) and Deckers' (DECK) UGG boots are selling well.

Department stores and household goods are strong. Cramer is bullish on Macy's (M), Jarden (JAH), Newell Rubbermaid (NWL), Target (TGT), Williams Sonoma (WSM). Job losses are slowing and and there has been a four month decline in foreclosures. Cramer would consider buying home improvement companies Sherwin Williams (SHW) and Masco (MAS). Gasoline prices are lower and that leaves more room for the consumer to spend. Visa (V) is also reporting a vigorous debit-card business.

Other strong retail names include: Tiffany (TIF), J.Crew (JCG), Urban Outfitters (URBN), Home Depot (HD), Phillips Van Heusen (PVH). While retail's story sounds like a fairy tale. "It's completely true," said Cramer.

Wake Up and Smell the Coffee War: Peet's (NASDAQ:PEET), Green Mountain Coffee Roasters (NASDAQ:GMCR), Starbucks (NASDAQ:SBUX), Diedrich Coffee (DDRX)

Given America's love (or rather addiction) for coffee, the battle between Peet's (PEET) and Green Mountain Coffee (GMCR) to acquire Diedrich Coffee (DDRX) is fierce. Green Mountain Coffee controls 58% of the market on single-cup coffee makers with its Keurig machine. The demand for single-cup coffee makers is growing 38% while demand for regular coffee makers rose just 7%.

The fight for Diedrich centers on coffee pods, individual servings used in single-cup machines. The business model depends on these coffee pods, since machines are rather cheap and the money is made on selling refills. Keurig's machine uses a special pod called a K-cup. Green Mountain, Keurig's owner, owns 75% market share in K-cups but Diedrich is the largest independent K-cup distributor. While Peet's fought hard for a deal with Diedrich, it appears that the victory may well go to Green Mountain, which will control 95% of the market in K-Cups if it takes over Diedrich. Peet's will also have difficulty competing against Starbucks (SBUX).

“If you want a coffee shop, buy Starbucks,” Cramer said. “But if you’re looking for a growth coffee name, the stock to buy is Green Mountain.”


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