Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday February 28.
When Cramer doesn't have an immediate call on a stock, he tells viewers he will do homework on the company and get back to them. Cramer kept his promise as usual, and discussed United Stationers (USTR), Ironwood Pharmaceuticals (IRWD) and Navios Maritime Partners (NMM). While USTR sounds like it has a great story, with its office supply distribution business supplying big names like Staples (SPLS), and a 16% gain after a strong quarter in February, high gas prices are bad news for USTR. Cramer is concerned that Staples might try to cut costs by cutting out the middleman, meaning United Stationers.
Ironwood Pharmaceuticals is a "one drug wonder that is playing Russian roulette with the FDA." The company has no product revenue and no profits, but is staking everything on an FDA approval of its constipation drug, which is expected to be approved or denied approval by the third quarter. While the potential upside is huge -- $2.4 billion globally -- "there are better ways to play FDA approval lottery," said Cramer.
Navios Maritime Partners (NMM) is a master limited partnership which offers an 8.6% dividend. While Cramer likes MLPs, this one doesn't have a safe dividend. He would stay away from NMM and its parent company Navios Maritime Holdings.
CEO Interview: Jeff Bradley, Globe Specialty Metals (GSM)
When worries arise about rising prices of raw materials, companies that want to survive and thrive need two things: 1) pricing power and 2) control over expenses. Globe Specialty Metals (GSM) has both of these abilities, and is a low-cost producer of silicon for chemical, steel and solar companies. Globe has 50% market share in silicon and is the world's second largest producer. With 3-5 years required to build a plant, the barriers to entry are high. Globe recently reported an amazing quarter with a 2 cent earnings beat and revenues up 44% over last year. The company's lower cost contracts are expiring, and Globe can begin new ones at higher prices, especially as it serves industries that are experiencing a recovery. The stock has risen 174% since Cramer got behind it as a speculative play in 2009 and 41% since November. Cramer thinks the stock has more room to run.
Jeff Bradley discussed the company's new plant in Iceland where energy costs are low. This is good news for Globes since energy comprised a third of the company's budget. The location on the water is convenient for shipping raw materials in and silicon products out. Cramer is bullish on the stock.
We are in a split market divided between companies that do well when commodity prices rise: industrials and materials companies that can pass on higher raw costs because global demand is high, and consumer goods and discretionary products that suffer from rising commodity costs. Supermarket stocks suffer because people can buy knock-off brands of their favorite goods, but no one can find a knock-off Hain Celestial (HAIN) at Whole Foods (WFMI). Proprietary consumer goods and restaurants like Chipotle (CMG) survive the down times because people will pay up for quality and originality. In addition, no one can make a knock-off brand of heavy equipment, and customers are forced to pay up for a Caterpillar (CAT) crane or a Honeywell (HON) device. While tech is taken down in such an environment, demand for an Apple (AAPL) will remain strong, so Apple and its pin action plays do not stay down for long.
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