Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday September 21.
A One-Stop Hedge for Housing: CoreLogic (NYSE:CLGX)
The housing starts number was not so bad, but still, there is significant uncertainty about where exactly housing is headed. Cramer would buy CoreLogic (CLGX), since the company deals both with foreclosures and new mortgages. CLGX's business information services division, which produces half of its revenues, provides lenders with all the information they need. The company is a "natural hedge" because it has profits from both a bullish and a bearish housing market. If mortgages increase, so do CoreLogic's revenues, but 25% of its revenues come from foreclosures as well. The company has a data and analytics division which is a very stable source of cash. The stock is also cheap, trading at a multiple of 6.
Cat has had a huge run, up 240% from its low on March 2009, and recently has hit a 52-week high. Many people are worried about buying Caterpillar up so high, but according to the chart, the stock might still have legs. Caterpillar has been constantly rising after reaching consolidation points. Investors are still buying the stock, and demand is not waning. Another plus is that Caterpillar is not heavily owned by institutional investors and thus is not subject to their whims. The world's major industrial, even close to its 52-week high, is still only trading at 7.6 and 9.5 times estimated earnings, with a growth rate of 20%.
Pall Corp (NYSE:PLL), Merck KGAA (OTCPK:MKGAY)
Cramer dedicated a segment to the topic of filtration, a seemingly boring topic, but a sector that is heating up. Recently, German company Merck KGAA took over Millipore, and Cramer is looking for the "son of Millipore" with industrial exposure. Filtration is in demand everywhere, from airplanes to heavy-duty trucks to air compressors. Pall Corp (PLL) is a major player in the purification, filtration and separation game, and makes almost every kind of filtration system imaginable. Pall beat its latest earnings estimates by 8 cents and orders are up 19% with better-than-expected guidance and high gross margins. The company is diversified across the globe with 38% of revenues coming from Asia. Filtration means constant recurring revenue. Even though the stock has risen 8% recently, a takeover bid could value the stock at $60, 45% higher than where it is now.
MedcoHealth Solutions (NYSE:MHS), Teva Pharmaceuticals (NYSE:TEVA), Goldman Sachs (NYSE:GS), BP (NYSE:BP)
Cramer warned viewers not to get sucked into general moods of the market. This is easier said than done and he discussed some mistakes he has made in the past year when he felt overly influenced by external factors.
MedcoHealth Solutions (MHS) had a high growth rate of 19%, but was taken down rapidly in a head and shoulders pattern. There was a lull in generics that brought down MHS's growth, but Cramer sees this pattern reversing, and thinks the stock might be bought. Similarly, Teva's stock fell in July from $54 to $47 in a "sickening nosedive." However, Cramer thinks Teva could also head up.
He also regretted putting too much credence in the SEC-inspired negativity about Goldman Sachs (GS); Cramer bemoaned the fact he missed a 20 point rise in the stock. The negativity in BP (BP) was also overdone in the wake of the oil spill, said Cramer.
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