Cramer's Mad Money - Multiple Expansion Is Heresy (3/6/14)

|
 |  Includes: AMZN, CSX, D, DIS, FB, GOOG, JOY, LINEQ, LNCOQ, LNG, NFLX, PF, PM, SGMO
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 7.

Disney (NYSE:DIS), Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB), Google (NASDAQ:GOOG). Other stocks mentioned: Philip Morris (NYSE:PM), LinnCo (LNCO), Linn Energy (LINE)

The Dow gained 62 points on Thursday, but the bearish commentators still hate this market. Many think that it is "heresy" to suggest that certain stocks deserve to trade at a premium. While the street recognizes that Disney (DIS), once a hit-or-miss company, is performing consistently under the stewardship of CEO Bob Iger, and is winning with ESPN, theme parks and films, few are willing to pay a premium for the stock. Cramer thinks Disney is the kind of stock that is experiencing "multiple expansion," and is worth paying up for. In this category, he includes Amazon (AMZN), Netflix (NFLX), Salesforce.com (NYSE:CRM), Facebook (FB) and Google (GOOG).

Cramer took some calls:

Philip Morris (PM) is not a stock Cramer recommends.

LinnCo (LNCO) reported a tepid quarter, and parent company Linn Energy (LINE) has not been a successful holding in Cramer's charitable trust.

CEO Interview: Michael Ward, CSX (NASDAQ:CSX). Other stock mentioned: Joy Global (NYSE:JOY)

Joy Global (JOY) gave good news on its earnings about the coal industry, which seems to be bottoming, especially with higher natural gas prices. This is good news for CSX (CSX), which has its finger on the pulse of the economy, since it is levered to so many industries. CEO Michael Ward says he is optimistic about coal; he had expected flat volumes, but in the coming year, coal volumes may be positive. In recent quarters, CSX was losing revenue in coal, but was replacing the loss with growth in other sectors. About 6% of CSX's business is related to housing, so the increase in housing starts should be a tailwind. The increase in auto production is also a bright spot for the company, as well as a rise in production of chemicals. CSX is in the process of converting many of its locomotives to natural gas. Oil companies are using rail for transport, and Ward expects a 50% increase in the oil segment of the business this year. Cramer thinks CSX is going higher.

Is Putin Worried About U.S. Natural Gas? Cheniere Energy (NYSEMKT:LNG), Dominion (NYSE:D)

In spite of headlines of certain news articles, potential exports of U.S. natural gas are probably not bothering Vladimir Putin. The only company that will have a working export facility any time soon is Cheniere Energy (LNG), and maybe Dominion (D), which is transforming an import facility into an export facility. When these are up and running, they most likely will not have an impact on geopolitical conflicts, and the odds are against any natural gas from leaving the U.S. until 2018.

CEO Interview: Edward Lanphier, Sangamo BioSciences (NASDAQ:SGMO)

Sangamo (SGMO) is a game-changing small, speculative biotech company that works on healing patients by making changes in their DNA, rather than just treating them. The stock has risen 17% on bullish news about its "genome editing" technology and strong data on its HIV therapy. The stock has generated a 145% gain since Cramer got behind it less than a year ago. CEO Edward Lanphier discussed the possibility of curing patients with HIV and doing away with the need for drug cocktails. The company also is developing therapies for hemophilia, sickle cell anemia and other disorders. SGMO has 4 new programs planned for next year.

CEO Interview: Bob Gamgort, Pinnacle Foods (NYSE:PF)

Pinnacle Foods (PF) owns brands that appear in 85% of American households, and the company takes familiar but lackluster brands and revamps them. The stock has gained 41% since it went public a year ago, and the company reported improvement in sales and is paying off its debt. PF is a good low-risk addition to a portfolio and has dividend growth potential. CEO Bob Gamgort discussed the company's strategy of reinvigorating brands through innovation. The company's biggest brand is Birdseye, which is also a play on the healthier eating trend. Gamgort pointed out that 40% of PF's sales are from products that are made mainly of fruits or vegetables. PF is focusing on the domestic market, and Gamgort explained that one way of keeping overheads low is to concentrate on markets that are already working. He doesn't feel that many brands translate well to overseas consumers. Cramer is bullish on Pinnacle Foods.

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

Jim Cramer’s Action Alerts PLUS: Check out Cramer’s multi-million dollar charitable trust portfolio and uncover the stocks he thinks could be HUGE winners. Start your FREE 14-day trial now!

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