Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday November 3.
SodaStream's (SODA) IPO was strong; the stock rose from $20 to $24.75, and Cramer wondered if this beverage machine producer could be the next big thing in drinks since Hansen Natural (HANS), which saw a 1,000% gain between 2004 and 2006 or Green Mountain Coffee Roasters (GMCR), which rose 1,173 between 2006 and now thanks to the Keurig. However, if SODA fizzles after the initial pop, it might resemble Jarden, producer of the Jimmy Buffett Margaritaville frozen-drink maker, which hasn't brought the company major gains.
SodaStream's CEO Daniel Birnbaum came on the show and demonstrated the beverage maker, which produces seltzer from tap water. Included are 100 different flavors. For just $4, the equivalent of 33 cans of soda can be produced at home without wasting cans and harming the environment. The soda has fewer calories and is healthier than the store variety and saves 70% of the cost of buying soda in stores. Included are special lids that keep the soda fizzy and eliminates the need to throw away stale pop.
While SodaStream's device can be found at Bed Bath & Beyond (BBBY) and Williams Sonoma (WSM), the company only has 10% penetration in North America, and plenty of room to grow. A full 80% of its sales come from Europe and 20% of all Swedish homes contain the company's soda maker. In just 2 years, the company has already reached 24 markets. Cramer says he likes SODA's story and will keep an eye on the stock.
GM, Ford (F)
Cramer thinks GM's IPO is going to be a "multiple-expanding opportunity" for Ford; "not only is Ford getting its cars together, it is getting its balance sheet together." In spite of GM's ambitious restructuring, Ford, which is taking market share, is going to outperform GM, which has a huge unpaid legacy and is "trying to get it together with a damaged brand." At $15, Ford seems remarkably cheap in comparison to its rival. GM's shares might jump initially with its IPO, and Cramer would use the opportunity to buy Ford.
CEO Interview: Mark Ellis, Linn Energy (LINE)
Regardless of election returns or the Fed, it always helps to have a high-yielding stock as a safety cushion. Linn Energy (LINE) recently raised its dividend 5.5% to 7.7%. In addition, the company is a partnership, something Cramer calls a "money machine" with tax favored status. In addition, LINE beat its recent quarter by 3 cents a share. While it was once mainly a producer of natural gas, LINE is increasing its oil exposure, and since 100% of its natural gas is hedged, it won't be adversely affected. CEO Mark Ellis noted that its natural gas is hedged with puts, so the company will benefit if the fuel increases in price.
Linn has enjoyed significant success lately, rising 136% percent since Cramer recommended it in May 2009 with dividends reinvested (those who didn't reinvest the dividends still caught a 105% increase). Cramer asked the CEO if the company could maintain its strong performance, and noticed the company raised its distribution for the first time in 17 years. Ellis responded that the goal was realistic with strong cash flow, and organic growth. He envisions more acquisitions in the future and discussed the success of the Permian Basin deal, which now comprises 20% of the company's output and produces 20,000 barrels a day.
Ellis was happy to hear the President mention natural gas before other alternative fuels, and thinks the fuel will grow in popularity, since it is clean, cheap and local. Cramer praised Ellis for "delivering consistently," and said LINE is going higher.
The Market's Multiple: Peabody (BTU)
The real winner of Tuesday's election was the stockholder, since the victory appears to have been good for the market. Cramer pointed out the fact that Wall Street likes a Republican takeover, because the price to earnings multiple is higher when Republicans are at the helm. When the Republicans had the majority between 2001 and 2006, the market's multiple was 18.5. Currently it is at 14.8, but with Nancy Pelosi vacating her position in the House, stocks should go up.
Cramer thinks Pelosi had the greatest negative impact on the market's multiple, since she got behind anti-business proposals such as card check, cap and trade, and healthcare reform. Just her departure alone should raise the multiple at least a point. With the EPA of the back of companies, Cramer thinks now is the time to buy Peabody (BTU), which could rise from $53 to $75.
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