Cramer's Mad Money - A Win-Win Situation (8/5/10)

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Includes: BG, CREE, DD, DEW, MON, ON, POT, POWI, WIN
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday August 5.

CEO Interview: Jeff Gardner, Windstream (NASDAQ:WIN)

No matter what the market is doing, investors need to own at least one stock with a "notoriously big juicy yield" to cushion their portfolios. Windstream (WIN) is the ultimate win-win situation, because even if the stock price goes down, the dividend rises. Cramer recommended Windstream in 2008 at $13.39, and although it is down 13% since then, the dividend gained by 7% to its current 8.7% level. Although Windstream is lower than it was in 2008, it has risen 17% since September 2009.

While revenues declined by 3% in Windstream's recent quarter, that is probably due to its acquisition of Iowa Telecommunications. Operating income is actually up by 6%. Windstream is developing its business services and broadband, which are up 44% and 41% respectively. The number of total subscribers is up 9% over last year. The secret to Windstream's success is its consolidation of local telecom companies, a strategy which creates more cash and allows it to raise its dividend.

Jeff Gardner said Windstream's dividend is even more secure than it was a few years ago, and he urged investors to pay attention to the company's rising cash flow per share. When asked about potential acquisitions, Gardner said past acquisitions so far have been profitable and he is on the lookout for more in the future.

Bunge (NYSE:BG), DuPont (NYSE:DD), Monsanto (NYSE:MON), Potash (NYSE:POT), Deere (NYSE:DE)

Russia's drought and the country's ban on wheat exports have driven up wheat prices in the country by 7%. Cramer commented, "What we're seeing here is a turbo-charged ag bull market based on soaring demand from emerging markets creating a potentially massive worldwide food shortage." In addition, China, while striving to supply its own needs, has to import 75% of its soybeans, and India isn't able to keep up with China's demand for the staple.

This is great news for American agriculture plays, especially since Potash (POT) beat estimates by 19 cents, Bunge (BG) can provide needed fertilizer to emerging market countries, and Deere (DE) is a strong ethanol play. Cramer would even consider buying Monsanto (MON), even though he hasn't liked the company for some time. He thinks estimates have gotten so low that Monsanto can beat them, and it raised its dividend by 3 cents on Wednesday. Cramer thinks the agriculture bull market is here to stay.

The New Face of Going Green: Cree (NASDAQ:CREE), Power Integrations (NASDAQ:POWI)

Energy efficiency is "the new face of going green," since the sector is profitable and unlike the renewable energy space, doesn't depend on government subsidies to thrive. One energy efficient idea that is going to turn profits is the transition from regular light bulbs to those using LED technology. In 2007, Congress passed a law requiring more energy efficiency for light bulbs between 2012 and 2014. The introduction of new LED bulbs is going to be a $50 billion market.

Cree (CREE) is the leader in the LED space, but the stock has fallen lately because of an article that some LED producers in Taiwan are receiving fewer orders. Some believe that Cree only offers computer screen backlighting, while 75% of Cree's business comes from general purpose lighting. The company's gross margins are 17-22% ahead of the competition. In the past year, Cree's shares are up 112%, and while the company trades at a high multiple of 22, its growth rate is 22%; "It's pretty cheap," said Cramer.

For a speculative play, Cramer recommends Power Integrations (POWI). The company makes high-voltage semis used in energy conversion. The chips are versatile and have significant exposure to LED. The company reported an excellent quarter with gross margins up 50.5% from last quarter.

Cramer calls the LED space a group "that has government support but doesn't need it."

CEO Interview: Keith Jackson, ON Semiconductor (ONNN)

While the mobile internet tsunami storm has been raging, even as the rest of tech is lackluster, not all stocks levered to the smartphone revolution are created equal. Cramer's Mobile Internet Tsunami index is up 29% since 2009 compared to the S&P 500's 15% rise of the same period. However, one stock in the index, ON Semiconductor (ONNN) is down 7% since the index was started. While the company has a solid quarter with a 2 cent earnings beat, the stock was chased down on concerns of the company's in-line outlook and flat pricing for its chips. In addition inventories are up and analysts are concerned that this is a sign of weakened demand.

Keith Jackson said growth is slowing for the time being, and while investors need to be aware of this, the cycle is not over. While automotive, wireless and industrial sectors are strong, consumer markets are "skittish." Cramer says he is less worried about this news with ON's stock price at $6 than he was when it was at $10.

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