Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program Wednesday November 9.
CEO Interview: Patrick Doyle, Domino's (DPZ)
With the roller coaster of Europe negatively impacting stocks, Domino's Pizza (DPZ) may well be a buy on any decline. The stock has moved up since its successful quarter on October 18, and the company is still reaping the benefits of its comeback when it reinvented its recipe. The stock is up 99.4%, but Patrick Doyle pointed to the stock's low multiple and aggressive growth. "We are still a great buy." The Tuscan and Artisan pizzas are popular with customers, who a few years ago compared Domino's Pizza to cardboard. "If the market goes down again tomorrow, this might be a chance to get in," Cramer said. "What a stock."
Instead of the "Am I Diversified" segment, Cramer outlined an ideal, diversified portfolio of high-yielding stocks.
1. Windstream (WIN) yields 8.5% and is expanding beyond the declining wireline business to expand into broadband, enterprise and data centers. Of all the five stocks Cramer is discussing, this has a dividend that is the least safe. For telco with a safer but smaller dividend, Cramer would buy Verizon (VZ).
2. Solar Capital (SLRC) has a 10.7% dividend which is safe. The company lends money to small businesses and returns 90% of profits to shareholders in the form of a yield. The stock is a buy here, but would be more attractive on a decline.
3. Energy Transfer Partners (ETP) yields 8.3% and is a steady toll road for moving oil and gas around the country. New oil and gas discoveries are driving demand for pipeline. The only concern about the company was its propane business which it sold a few weeks ago.
4. American Electric Power (AEP) is a utility that yields 8.4% and powers the Heartland, where manufacturing is of prime importance. The utility derives 60% of its power from coal, and a recent easing of EPA standards should help the company.
CEO Interview: Daniel Akerson, General Motors (GM)
GM (GM) was "put through the meat grinder" after a somewhat imperfect quarter with a cautious outlook, but earnings and revenues were better than expected. CEO Daniel Akerson said that since its bankruptcy, the company has been able to restructure brands and avoid permanent damage to its products. GM has invested $6.6 billion to create jobs and improve manufacturing. While GM admitted that Europe was flat, new products in Latin America, particularly Brazil, are creating demand, and growth in China is strong. The company saw 15% growth in the U.S., and 2011 was the first time since 1977 that the company gained so much market share for two years in a row.
"It was a solid quarter, but there are storm clouds on the horizon," said Akerson, pointing to uncertainty about Europe as the main cause of the company's woes. However, Akerson says the company has a plan of action to deal with the challenges. One ray of hope is that GM is now making money at the low part of the cycle when it used to lose money during the slower part of the year.
Apple (AAPL) Is No Longer a Given
Apple (AAPL) used to be a stock investors could buy on every dip and every worry. The company seemed to be minting money, and each decline was a buying opportunity into the next big thing. However, with the passing of Steve Jobs, news is coming out about weak tablet and iPhone sales and concerns about holiday sales of the iPod. Do we need to worry about Apple? While Cramer doesn't think the stock is a sell and may go higher, he admits he doesn't have the kind of faith in Apple he once did. Apple is no longer a given, and he said he is not going to automatically recommend it.
Fluor (FLR) and Foster Wheeler (FWLT) are two engineering and construction companies that reported disappointing quarters last week and saw declines in their stock prices: FLR was down 4.6% and FWLT saw a 6.5% decline. However, Cramer urged viewers to look beyond the headlines and to see how vastly different the performance of the two companies has been.
While FLR missed earnings by 7 cents and gave disappointing guidance, the earnings miss was due to weather-related costs in developing a wind farm which is 90% completed. FLR traditionally gives conservative guidance, and the stock's run-up prior to the quarter may account for the decline. Two important metrics to look at in this industry are backlog and orders. FLR reported a robust backlog with billings up 4% from last quarter. The company made $6.7 billion in new contracts when The Street was expecting just $5.8 billion. FLR is trading at a multiple of 14, well below its historic level of 19, with a 12.4% growth rate.
Foster Wheeler (FWLT), on the other hand, "blew it." The company missed earnings by 11 cents. Backlog fell an astounding 18% yoy, when The Street was looking for a 5% decline. Orders were down by double digits for all of its major divisions. The company has fewer orders than it can handle, and the competition is eating it alive.
Instead of trading on the headlines, Cramer urged viewers to look at the conference call first and do homework before making an investment decision based on earnings.
Editor's Note: Mad Money on Wednesday November 9 was broadcast live from the Republican Presidential debate, and there was no Lightning Round.
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