Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday July 16.
5 Picks from the Delivering Alpha Conference: Thermo Fisher Scientific (NYSE:TMO), Petrobras (NYSE:PBR), Citigroup (NYSE:C), National Oilwell Varco (NYSE:NOV), Flextronics (NASDAQ:FLEX) Other stocks mentioned: Berkshire Hathaway (NYSE:BRK.A), (NYSE:BRK.B), Vale (NYSE:VALE),
Cramer was the moderator of a panel at the Delivering Alpha Conference with 3 managers: Lee Cooperman, Larry Robbins and Michael Novogratz. These managers were "thoughtful and constructive without being promotional about themselves and their funds." Lee Cooperman's ideas at this conference have substantially outperformed the market. Cramer remembers his early days as a hedge fund manager when Cooperman recommended Berkshire Hathaway (BRK.A), (BRK.B) when it was trading at $200.
Novogratz is a contrarian who plays with big picture macro ideas. Now he likes the 2 most hated markets: Argentina and Brazil. Argentina is too unstable, but Cramer thinks Brazil is "intriguing." Things are so bad, that the government might be ousted, reasoned Cramer, in favor of a more pro-business regime. Cramer asked Novogratz about Vale (VALE), but the latter did not want an iron ore trade. Petrobras (PBR) is a stock Novogratz recommended; Cramer thinks the stock could rise 50% with a new government.
Lee Cooperman and Larry Robbins both recommended Thermo Fisher Scientific (TMO), which is a company that has delivered and has fast growth. Robbins thinks the stock is cheap, because the sequester affected health research, since a major client is the government. With sequester problems placed in the past, TMO may be a buy. Cooperman recommended Citigroup (C), which is a stock the market has not liked. Management is fixing its problems, and since interest rates seem to be headed higher in the future, it should benefit.
National Oilwell Varco (NOV) is a stock Cramer has liked and has recently sold off a division. Its strong balance sheet and low interest rates have enabled NOV to secure funding. Cramer thinks it could go from the mid-80s to $100. Robbins recommended Flextronics (FLEX), which is a contract assembler of high-tech devices. The company is buying back 20% of its stock annually and trades at a cheap 9 times earnings.
Time Warner (NYSE:TWX), Twenty-First Century Fox (NASDAQ:FOX), Intel (NASDAQ:INTC), Cisco (NASDAQ:CSCO), Microsoft (NASDAQ:MSFT), Bank of America (NYSE:BAC), EOG Resources (NYSE:EOG), CBS (NYSE:CBS), Disney (NYSE:DIS), Occidental Petroleum (NYSE:OXY), Anadarko Petroleum (NYSE:APC), Whiting Petroleum (NYSE:WLL), Kodiak Oil & Gas (NYSE:KOG), Pioneer Natural Resources (NYSE:PXD). Other stocks mentioned: J.C. Penney (NYSE:JCP), Royal Caribbean (NYSE:RCL), Globalstar (NASDAQ:GSAT)
The Dow climbed 78 points on Wednesday. Cramer said the gains in the market have been "extraordinary." The hostile bid for Time Warner (TWX) for $85 per share by Twenty-First Century Fox (FOX) demonstrates the consolidation in the cable market. "This deal makes so much sense," said Cramer. TWX has strong fundamentals and has a healthy buyback. This company was once a jumble of disparate businesses, and it has spun off its extra units. CBS (CBS) is cheap and is buying back stock, and Disney (DIS) is a buy, even though it is too big to be taken over.
Old tech is the low risk, high reward place to be right now. Intel (INTC) is a stock Cramer recommended a few days ago, it reported a fantastic quarter and the stock rallied 9%. Companies are spending on computers again, and Intel is a main beneficiary. Cramer thinks the upside on Intel is capped, because it lacks a mobile strategy, and he prefers Cisco (CSCO). Microsoft (MSFT) is good, but it ran so much on Wednesday that Cramer would wait for a decline.
Bank of America (BAC) reported a strong quarter and settled fears about its lawsuit. The company made sufficient money to deal with the Justice Department. BAC ran up going into the quarter, so it didn't see uptick. Oil has dropped 10%, and chartists say this is only the beginning of a decline. However, oil stocks soared because they are true growth stocks. EOG Resources (EOG), Occidental Petroleum (OXY), Anadarko Petroleum (APC), Marathon (NYSE:MRO) and Pioneer Natural Resources (PXD) are buys on this trend. Whiting Petroleum (WLL) would be a buy, but it is up on news of its acquisition of Kodiak Oil & Gas (KOG). These stocks are undervalued, according to Cramer. Companies with strong buybacks, low multiples and growth are stocks to put on a buy list.
Cramer took some calls:
J.C. Penney (JCP) is not a buy on takeover speculation. It is improving, but the retail group is so weak, that Cramer is reluctant to recommend it.
Royal Caribbean (RCL) is terrific, and Cramer thinks the cruise sector is strong. This is the cheapest stock in the cohort.
Globalstar (GSAT) is down significantly, and Cramer would buy it.
A viewer asked Cramer about Fiesta Restaurant Group (FRGI), and Cramer did some research on the stock. Cramer thinks Fiesta is a small, rapidly-growing restaurant stock that is worth a speculative trade. It is a regional to national story. The company runs 2 fast casual themes: Pollo Tropical is a Caribbean-themed play that gets half of its business from the drive-thru, and the typical check is $10. Taco Cabana is its Mexican theme, and many of these locations are open 24 hours a day. Pollo Tropical expects 17% annual store growth; it will start out building more stores in Florida and will expand into Texas. Taco Cabana is not growing as fast, because this theme is not as strong. FRGI is developing a grill theme as well.
The stock trades at a multiple of 29 with a growth rate of 20%. Same store sales increased 6.3% in its Pollo Tropical stores, and its 4 year comps are at 33%, the second highest in the industry after Chipotle Mexican Grill (CMG). Same store sales are sluggish at Taco Cabana, but the company is remodeling these stores, which should help FRGI reach its 2% same store sales target for Taco Cabana. The stock could move up significantly with the Taco Cabana revamp and the development of its mobile strategy.
Cramer took some calls:
Burger King (BKW) is doing well and is consistently undervalued. However, Cramer thinks Wendy's (WEN) is stronger and has the backing of Nelson Peltz.
CEO Interview: Michael Mears, Magellan Midstream Partners (NYSE:MMP)
Magellan Midstream Partners (MMP) is a good way to invest in the oil patch without exposure to the volatile price of oil. It transfers refined products through pipeline and has a storage business. The company also has oil projects in the Permian Basin. About 85% of its business is fee-based, which means it is not vulnerable to the price of oil. It expects to raise its distribution by 20% this year. The stock has risen 33% year to date. Cramer would buy on a pullback, but it is performing so well, so it might not dip.
If the government allows export of condensate, Magellan will be a beneficiary. It is increasing its production, and CEO Michael Mears says that the safety and performance on pipelines are improving. "This is the great growth stock for this moment," said Cramer. "Magellan has everything going for it."
Cramer answered questions about stocks sent to him through social media photographs and hashtags.
Sirius XM Radio (SIRI): The subscription business is great. It has been difficult, but Cramer has been behind it for a 50% move. "I'm not backing away. I think it works its way to $4."
PepsiCo (PEP): Nelson Peltz is putting pressure on PepsiCo for restructuring. Pressure or no pressure, PEP is good.
Halliburton (NYSE:HAL) is worth investing in as a technology business.
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