Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday November 7.
CEO Interview: Glenn Tullman, Allscripts (NASDAQ:MDRX). Other stock mentioned: Walgreen (WAG)
Allscripts (MDRX) is a healthcare company that is actually benefiting from government regulation. Medicare and Medicaid will now be available depending on the outcome of services rather than the old fee per service model. Hospitals and healthcare providers will need to monitor outcomes effectively and will need to implement software to provide feedback. MDRX makes software that improves efficiency and reduces mistakes for healthcare providers. MDRX has already profited from the government's call to switch to electronic medical records. A new regulation that requires hospitals to cover the cost of readmission will encourage the adoption of MDRX's technology, which limits errors that can cost money and lives.
MDRX beat earnings by 3 cents and reported a 12.9% rise in revenues and a 15% increase in bookings. The company has a healthy $2.7 billion backlog, and has risen 149% since Cramer recommended the stock in 2009. Since MDRX trades at a multiple of 19 compared to its 23% growth rate, the stock may go higher. CEO Glenn Tullman said MDRX is "well-positioned for growth" and added, "our systems save lives." Doctors can save money on malpractice insurance by using MDRX software, since insurers have reduced their rates for clients who use such software. Doctors can access the software on their iPhones as well.
Tullman discussed international growth and a new contract in Southern Australia, but noted the "U.S. is the most vibrant, aggressive market in the world." When asked about the company's ongoing battle with Walgreen (WAG), Tullman replied; "We work with all major pharmacy chains and transmit information electronically to any pharmacy the customer chooses."
"MDRX is a big winner and is going to continue to be a big winner," said Cramer,"It has accelerating revenue growth. I think the stock goes higher, and next quarter is going to be even better."
With the Dow rallying 85 points, the market is clearly showing its ability to snap back from adversity. In spite of huge negatives in the past week, the market's "resilience should be respected and acknowledged as pretty darn bullish." Cramer listed the obstacles stocks have overcome recently:
1. The collapse of MF Global, which is the 8th largest bankruptcy in U.S. history. The financial made the mistake of buying sovereign debt from Europe, and there is scandal over missing money and accounts that don't add up.
2. The resignation of former Greek Prime Minister Papandreou.
3. Fed Chairman Ben Bernanke's warning that the economy may not be so strong in the coming year.
4. The recovery of Brent crude, now at its highest level since July. While retail and restaurants were expected to decline, these stocks actually rallied.
5. The fall of Italy's economy and issues with Italian bonds.
7. A lackluster employment number last Friday.
While it doesn't pay to be sanguine, especially with so much uncertainty ahead, the recent performance of stocks, in spite of global and domestic problems, gives investors good reason to stay in the game.
Cramer agrees with the recent upgrades of Pier 1 Imports (PIR) and Home Depot (HD), and the strong performance of these companies might bode well for housing. Tractor Supply Company (TSCO), and Macy's (M), which has a huge housewares department are also seeing gains, and even Lowe's (LOW), which has been a "big loser" is stabilizing. While critics might not see this as a tell on the housing sector, because owners are fixing up their homes because they can't sell their houses at low prices, Cramer thinks people who are about ready to bail on their mortgage would not be renovating. PIR is priced well-below the competition; 50% below Pottery Barn and 15% below Target (TGT). With HD's and PIR's turnaround stories and superior management, Cramer thinks the stocks have more room to run.
Cramer took some calls:
Toll Brothers (TOL) was upgraded on Monday, but is likely to decline on the next poor statistic. Toll Brothers is the only housing stock Cramer would own, but he added that he wouldn't want to own any housing stock.
Digital Realty Trust (DLR) yields 4.25% and has had a gigantic move. Cramer told the caller he needs to do more research before he can opine on it.
CEO Interview: Herbjorn Hansson, Nordic American Tanker (NYSE:NAT)
Nordic American Tanker (NAT) is the best house in a terrible neighborhood, and may be a good stock to own when spot rates improve. However, currently rates are close to a 10 year low, while NAT yields 8.8%. Cramer worries whether or not the dividend is sustainable, given the company's negative cash flow, and since NAT is borrowing money to cover the yield. "We support shareholders in bad times," said Herbjorn Hansson, who insisted the company can still afford to pay the dividend. Rates rose suddenly, only to fall again, but Hansson said this is a sign of how suddenly the situation can ameliorate, and pointed to strength in Asia. NAT is buying up new ships now that they are at dramatically lower prices. When asked again how NAT can afford to pay the dividend given its other challenges, Hansson insisted; "I prioritize shareholders. Period. Because we can afford it...we can do it for years. I'm not promising, but we can do it for years."
Cramer said Herbjorn Hansson is by far the best CEO in the industry and Nordic American is best of breed.
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