Cramer's Mad Money - Honeywell's Machine Is Humming (3/9/11)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday March 9.

CEO Interview: Dave Cote, Honeywell (NYSE:HON)

Honeywell (HON) has had one of the most bullish analyst meetings in ages, said Cramer, where the company laid out a five year forecast whereas in the past, management was unable to outline a plan more than a few months down the road. Honeywell is a play on multiple bull markets, including aerospace and energy conservation. The one-time cyclical play is now seeing growth all year round and has turned into a world-class industry leader. Dave Cote saw the recession coming and cut costs before the onslaught. Because the company was prepared for the worst, it is coming back with a vengeance, and is inexpensive, selling at a multiple of 13 with a 13% growth rate.

Dave Cote explained that the company is able to make such an aggressive forecast because it now has the institutional capability. "I feel good about the whole machine right now. It is really working. It is really humming. It feels pretty darn good." Cote explained that the company has incredible divisions that transcend the U.S. GDP. "There is no such thing as a company that is not in a cycle. The question is how well you perform when you are in that cycle," and the last recession proved that Honeywell could not only survive, it can prevail. With the growth in emerging markets and rise in energy prices, Honeywell has "a multiplicity of macro trends that are growing in our direction...we are in the absolute sweet spot of growth."

Cote used the example of Turbocharged engines as an area where Honeywell is taking charge and saving the customer energy. The engine has a smaller size and uses 25% less energy, but the U.S. is behind the rest of the world in adopting such an engine on a massive scale. Cramer congratulated Cote on Honeywell's strong performance and called him "the most bankable large cap CEO in the world today."

CEO Interview: Steve Sadove, Saks (NYSE:SKS)

With higher gas prices and after Urban Outfitters (NASDAQ:URBN) "totally blew" its bad quarter, is there any hope for retail? Cramer would look to super upscale name Saks (SKS) which has broken out here. While he confesses he preferred other high-end names in the past, Saks "has the right formula for this market." February same store sales were the highest of any of its peers; 15.5% compared to analysts' expectations for 5%. The company reported a 5 cent earnings beat and a 6% rise in revenue year over year. The company is finally coming "back to its roots" and Cramer saluted Steve Sadove as the architect of this comeback.

Sadove said, "The consumer wants value, not just a good price, but quality." He feels the luxury customer is coming back and noted that, during the recession, customers did not want to surrender their brands but wanted lower price points. Now that the economy is improving, they are willing to pay higher prices. "Every one of our core businesses are on fire."

Saks is seeing growth across the country, with some of the most dramatic growth in Southern Florida where Latin American customers are paying up for quality. Sadove notes the most loyal customers shop both on the internet and in stores. Even though the stock plunged during the recession. Sadove believes the company is no longer in defensive but offensive mode and will continue to see an upside.

Happy 2nd Birthday, Brave Bull Market: Finisar (NASDAQ:FNSR), Cree (NASDAQ:CREE), Nvidia (NASDAQ:NVDA), Brandywine (NYSE:BDN), B&G Foods (BGF), Linn Energy (LINE)

In a market dominated by uncertainty about the Middle East and rising gas prices, it is good to look for safe places to invest in the form of high-dividend, low-risk stocks. Finisar (FNSR) plummeted 15 points after a disappointing quarter and took Cree (CREE) and Nvidia (NVDA) along with it. There is a lot of bearishness about tech now and Cramer would look instead to REIT Brandywine (BDN), which yields 4.8% and is a play on employment growth, up 34% so far this year. He also likes Linn Energy (LINE) with a 7% yield and B&G Foods (BGF) with a 6% yield.


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