Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday March 3.
This Stock Is Made for Walking: Deckers Outdoor (DECK)
Even though Deckers is up 47% since October and 19% since its winning earnings report on February 25, Cramer thinks the market of UGG Boots and Teva sandals is going to keep walking. Deckers surpassed earnings estimates, saw a 28% rise in same store sales and raised guidance. During the recent blizzard, everyone wanted UGGs, and even with winter ending, new seasonal lines and "great sales booking" with abundant pre-orders will keep the shoe company busy. Another reason for the great quarter was the quiet transition from wholesaling to retailers to selling directly to customers, a change that was largely responsible for the dramatic increase in sales.
Deckers has solved its problem with Teva sandals well ahead of the summer season. Sales of the sandals were down 18% last year, but with the reduction of inventory, Deckers no longer needs to sell these trendy sandals at bargain basement prices. In spite of its stock price jumping, Deckers has a multiple of only 12 compared to its 22% growth rate. Cramer says Deckers is "a screaming buy even after the run."
CEO Interview: Donald Sinclair, Western Gas Partners (WES) with Kinder Morgan Partners (KMP) and Enterprise Partners (EPD)
Western Gas Partners (WES) is a subsidiary of Anadarko Petroleum (APC) and is a "midstream" company which processes and transports oil and gas. Anadarko has been spinning off its midstream assets to WES so it can concentrate on production, while Western Gas now has 10 natural gas gathering systems in the Rockies, Texas and other regions and is able to process 1.2 billion cubic feet of natural gas daily.
Western Gas is not dependent on the price of gas and oil, since it is paid a fee for its services. The company has raised its distribution (the term Master Limited Partnerships use for dividend) for three consecutive quarters, and is a mere half point off its 52-week high. Donald Sinclair says Western Gas rides on the success of Anadarko, and distribution was up 10% last quarter. Anadarko is going to expand into Pennsylvania's Marcellus shale reserves, which will mean more business for WES. Sinclair emphasized that 70% of the company's gross margins come from fee-based services and the other 30% is hedged against fluctuations in oil and gas prices. Sinclair admits he has no idea why natural gas isn't being embraced more enthusiastically in the U.S. since this fuel could solve the country's energy and employment problems. Cramer is bullish on WES along with Kinder Morgan Partners (KMP) and Enterprise Partners (EPD).
The U.S. Is the Last Man Standing
Stocks were on their way up Wednesday morning before President Obama "killed the market" with his renewed talk about healthcare reform. But why is the U.S. market holding up so well in spite of our problems? The answer: other countries “are even more pathetic parodies of finance than we are,” Cramer said. “We are the lesser of 10 evils.” China's bubble is getting ready to burst, and Cramer paraphrased star short-seller Jim Chanos as saying China "is the greatest short on Earth." Japan "is a no-growth country that will stay no-growth." India is battling inflation, Brazil is overvalued and Europe is the land of PIIGS and STUPIDs (Spain, Turkey, Ukraine, Portugal, Ireland and - not Europe, but - Dubai.)
Even though Cramer is not usually a fan of a strong dollar, since he believes it hurts American business, in the current state of affairs, not having a declining currency is a distinct advantage. While Cramer usually recommends owning some foreign stocks, he thinks there are very few countries worth buying right now. The U.S. is the Last Man Standing and although that's a “crummy Bruce Willis movie,” Cramer said, it’s a “great thesis for a next leg of the bull market.”
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