Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday February 23.
CEO Interview: Jim Taiclet, American Tower (NYSE:AMT)
Cramer spoke with Jim Taiclet, CEO of American Tower (AMT), which is the largest and most international wireless tower play and is the physical backbone or even the nervous system of the mobile internet tsunami. The company missed earnings by a penny, but Cramer explained, "This is not an earnings per share story. This is a growing cash flow story."
With the move from 3G to 4G, wireless carriers are going to need more tower space. AMT can put multiple clients on the same tower and can make around $20,000 per tower for every $1,000 in costs. The company is making aggressive moves into emerging market countries, with some of the largest growth in India, where there is strong potential for growth in voice and data services. American Tower was one of the first companies to expand into Africa.
Since Cramer got behind the stock in May, AMT has gained 46% and there may be more upside as the company decides whether or not it is going to become a REIT at the end of the year. Jim Taiclet says he has seen accelerated demand in the past 2 years with the iPhone and the Android and expects it to continue. The company is in a position to raise rates as its clients see more profits; "We share in the success of the carrier," said Taiclet. American Tower may be a key supplier for the National Public Safety Network which will help connect first responders in emergencies; "This should and will happen," said Taiclet.
Cramer says American Tower is "one of the cleanest stories out there," and is the perfect revenge buy for dropped calls.
CEO Interview: Michael Johnson, Herbalife (NYSE:HLF)
Even with the crisis in the Middle East raging and stocks tumbling, Herbalife (HLF) was up over $7 after its monster 19 cent earnings beat, 17% increase in sales and a 16% rise in volumes worldwide. The company raised guidance and approved a 2 to 1 stock split. Herbalife is a great play on three trends: 1) the growing problem of obesity 2) the greying and growing health consciousness of baby boomers 3) unemployment. As a direct marketing play, people can sell Herbalife when they are looking for more steady jobs or to add to their income. "It's Herbalife's time," declared Cramer who said he was happy to have gotten behind the stock even when it was being brought down by short sellers, and the stock has seen an 88% gain since 2009.
Cramer praised CEO Michael Johnson for "taking Mexico by storm," thanks to the formation of regional Herblife clubs and warehouses. Johnson said Brazil is the next country to follow Mexico's model. He added that "Brazil is a growth model and China is a long-term bet." When Cramer asked why the company is so underestimated, Johnson responded that Herbalife does not need television advertising and its customers and sellers are gained through word of mouth and its strong internet presence. "We are just getting started," he added. "We have a very personalized business." Johnson is proud of Herbalife's retention rate: 50% of active sales leaders continue to buy and promote Herbalife's products, and this number is up dramatically from 23% a few years ago. In addition, the company continues to produce high-quality products and literally millions of jobs.
Cramer said about Herbalife and Johnson; "A fabulous quarter, great work. He is the real deal. We got behind him when everyone else was running. You see a pro...you see what this guy is doing...this is going higher."
With a horrible rollercoaster of a day when the Dow closed 107 points, Cramer says it is time to distinguish real opportunities from false ones. "I'm not a bull nor a bear, but an opportunist." He admits he is not a "buy the dip" bull when that crazy man Gaddafi is sitting on a huge amount of oil the world needs. "That does not inspire confidence. Libya is not Egypt...Libya is North Korea with oil."
Expensive gas does not inspire hope, and Cramer wondered why the U.S. government does not open the petroleum reserves or exploit the huge oil reserves that exist in the U.S. Cramer looked back to 2008 to what was working and not working when oil prices were soaring. He noticed almost all sectors were down while oil kept moving up. Therefore, with oil rising with no end in sight, Cramer would stay away from most sectors, but would buy areas that are working like gold, energy, agriculture, and industrials that have been knocked down 10-12%. Even though Agnico Eagle Mines (AEM) reported an "awful" quarter, the stock is rallying and Cramer's charitable trust bought Fluor (FLR) which declined heavily following its quarter. With stocks being sent down irrationally, Cramer would "buy the irrationaities" but only in areas that are working and tend to do well when oil is high.
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