Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday September 20.
"Sometimes enough is enough," declared Cramer explaining why he believes one of his favorite stocks, Chipotle Mexican Grill (CMG) has gotten too expensive for the moment. Few have been more enamored of Chipotle as a growth story than Cramer, who got behind it at $48 in 2009; the stock closed at $333 on Tuesday. Chipotle jumped 30 points on the opening of an Asian restaurant chain, and while it is a great concept, the stock has gotten too hot, and Cramer would take gains. Chipotle remains a great story, since it combines quality, service and health-consciousness, and while the lines keep growing and it plans to expand both domestically and internationally. Cramer would wait for lower levels to buy the stock.
Cramer took some calls:
Freeport McMoRan (FCX) is a buy on the way down for its yield, but Cramer would use caution.
Cramer explained that high growth stocks are what works the best in a slow growth environment. While it is time to get out of Netflix (NFLX) because of its self-inflicted woe, other high growth stocks are worth a look.
CEO Interview: David Crane, NRG Energy (NYSE:NRG)
NRG Energy (NRG) is "the most forward thinking energy company," in the U.S. with solar, nuclear, wind and natural gas energy solutions. The company has made a deal recently to power the stadium of the Washington Redskins on solar power alone. "Solar is not just about public service," said CEO David Crane, but is also cost-efficient, and the CEO added that in 3 to 4 years, the cost of solar might be lower than the cost of drawing power from the grid. With the price of solar panels going lower, solar is becoming price competitive compared to other forms of energy and is the ideal off-grid solution for when the conventional system goes down; during Hurricane Irene, NRG's solar panels functioned well. Solar panels also are a statement of what companies and individuals stand for, and with an increasing number of consumers and employees wanting businesses to be concerned about sustainable energy, demand will grow for solar panels.
Concerning other forms of energy, Crane said offshore wind needs a lot of variables to come together before it becomes a large scale resource. While Crane believes in the long-term future of nuclear power, it is a difficult sell right now. Natural gas seems a viable near-term solution, given its low price, and the company can lock in the current prices for 5 years. While the CEO looks forward to the day the company can issue a dividend, the current price of $23 is so undervalued that shareholders benefit from buying the stock.
"NRG has been a winner this year and I think it is going to stay a winner," Cramer said.
September doesn't just mean back-to-school, it also means back-to-tech. In 9 of the last 10 years, the tech sector has bottomed and turned around in mid-September, and Cramer thinks a U-bottom is forming for the sector now. Stocks of companies like Oracle (ORCL) and Adobe (ADBE) are performing well, even if the companies aren't giving spectacular guidance. Avnet (AVT) is the tech stock to watch, because it is the world's top distributor of electronic components and information technology. This IT hardware company is "the largest supermarket of tech on Earth," and is a gauge for the health of the industry. Avnet has been moving up, 9% in the last 5 days, and is a tide lifting all U-boats. As companies increase their orders for tech components at the end of the year, Avnet should rise higher, especially since its multiple is at an extremely low 6.4 compared to its 12% growth rate. In the depths of the great recession, Avnet's multiple was at 6, and the economy, while slow, is not performing as poorly now as it was then.
While Cramer prefers dividends to buybacks, Avnet's current buyback is 10-12% of its market cap, so it significantly shrinks the float. The company's last earnings saw a beat of 7 cents and a 32.6% increase in revenues, which was slightly below what The Street expected. Guidance was disappointing and management's tone was cautious due to macro-economic factors. Orders were down for components, but Cramer thinks that was due to a slow summer for tech. Cramer thinks now is the time to buy Avnet.
Cramer took a call:
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