Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday November 5.
Cramer's strategy for casino stocks has been to avoid Las Vegas; Sin City was hit very hard during the recession, and he was pushing Macau plays Wynn Resorts (WYNN) and Las Vegas Sands (LVS) instead. While Macau is still "the hottest gaming market in the world," Las Vegas is turning around, with overbuilding at an end. The best way to play a Vegas recovery is with MGM Mirage (MGM), which is "the sultan of the Vegas strip."
"Virtually everything about MGM that used to be a negative is now a positive." Two key metrics, average daily rates and room occupancy are up, casino revenues in Vegas are up 21% since last year. The company's joint venture with Dubai World, the Aria CityCenter project which opened in 2009 "was the poster child for everything that was wrong with Vegas at the worst time." With a comeback, the center could bring huge profits. Luxury properties Bellagio and Mandalay Bay are thriving, revenues from conventions were up 40%, and MGM has the support of Senator Harry Reid, who was described on the conference call as "a very powerful force" for the company. In addition, MGM turned around its balance sheet which was "horrific" during the recession. At $12, MGM is worth a speculation, if not a gamble.
Both high-end and discount retail have done remarkably well, even in the depths of the recession. Tiffany (TIF), Coach (COH), Williams Sonoma (WSM) have been delivering the numbers as well as havens for more frugal shoppers, Family Dollar (FDO) and Dollar General (DG). The middle range, moderately-priced stores have been left out of rallies, but Cramer thinks they are ready to make their moves. With a decent jobs number, Cramer thinks middle retail will follow the leaders.
RealD (RLD) is a pure play on the 3-D trend with 50% market share worldwide. Cramer would wait for a pullback because of its steep valuation. Polypore (PPO) sold off 3 points after reporting an in-line quarter. However, the stock has recently gained $2, and Cramer would wait for a pullback to buy.
Altria (MO) has room to grow after buying a snuff business and Enterprise Product Partners (EPD) reported a strong quarter. Cramer likes these companies as dividend stocks, but would take a little bit off the table. Cramer does not think Chesapeake Energy (CHK) is going to be a takeover target, but says it is a stock worth holding onto because it could sell some assets which might be close to the value of the entire company. Cramer was "chagrined" that Waste Management (WM) was down, and says there is "absolutely nothing" wrong with the stock. He would "take the dividend and bide our time" with WM.
CEO interview: Todd Becker, Great Plains Renewable Energy (NYSE:GXP)
Cramer usually hates ethanol. Not least because as the value of the fuel rises, the raw costs rise, cannibalizing an ethanol company's profits. However, he made the exception in the case of Great Plains Renewable Energy (GXP) which he recommended on the EPA's requirement that fuels boost their ethanol content from 10% to 15%. On this catalyst, Cramer became bullish on GXP on August 27, and the company is up 28% since then, and reported a stellar quarter on October 22. The marketing and distribution sector was up 171%, but the stock price was driven back to earth by the company's convertible bond. However, Cramer thinks the stock could explode higher yet again.
Todd Becker said export demand and acquisitions were responsible for the strong quarter. He noted the company has bi-partisan support; Republican politicians representing farm states and Democrats concerned about the environment are behind ethanol. Becker explained that as ethanol rises, raw costs also rise, but the price increase of the fuel is much greater than the increase in raw costs. Cramer says the company "more than just delivered" and expects it to return to its 52 week high.
Earnings to Watch: Cisco (NASDAQ:CSCO), Frontier Communications (NASDAQ:FTR), Verizon (NYSE:VZ), Clean Energy Fuels (NASDAQ:CLNE), Fossil (NASDAQ:FOSL), Ralph Lauren (NYSE:RL), Nvidia (NASDAQ:NVDA), Disney (NYSE:DIS), GM (NYSE:GM), Ford (NYSE:F)
Cramer thinks Cisco (CSCO) will be the report to watch next week and thinks last quarter's problems will be "non-existent" since networking is hot. Cisco reports on Wednesday. Frontier Communications (FTR), reporting on Monday, will talk about cash flows and its acquisitions from Verizon (VZ). Clean Energy Fuels' (CLNE) Monday report will let investors know about what kind of support natural gas has in Washington, especially now that the Republicans control the House. Fossil (FOSL), which reports on Tuesday, is up 44% since Cramer recommended it in August. While it is at its 52 week high, Cramer thinks it has higher to run.
If Ralph Lauren (RL) has good things to say about pricing power, raw costs and China on Wednesday, he would consider buying it on a decline. Cramer recommended buying Nvidia (NVDA) after its lackluster quarter last time around, and those who followed his advice are up 42%. He would reduce positions by half coming into the current earnings report. Disney (DIS) has a tendency to drop after its earnings reports, so Cramer would buy the stock on a decline. Aside from earnings GM (GM) has its IPO this week, but Cramer still prefers Ford (F).
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