Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday November 10.
Cramer released Kraft (KFT) CEO Irene Rosenfeld from his Wall of Shame for good behavior. After years of underperformance, Kraft is making the smart move of splitting into two companies. Cramer compared Kraft as it is to a bad marriage that desperately needs a divorce, with both segments functioning more effectively if divided. Cramer criticized Rosenfeld for the acquisition of Cadbury at too high a price. With the split of the company, Kraft can better utilize its Cadbury assets. One segment is the snack business with brands like Oreo, Trident, Wheat Thins and the candy brands from Cadbury. The other segment are more steady, slower growth brands like Philly Cream Cheese, Velveeta, Kraft Macaroni and Cheese and Planters Peanuts. These "grocery" brands, spun off into their own segment, may yield 5%, far greater than Kraft's current dividend of 3.3%. The "snack" brand segment is concentrated on international markets, which should make up 40% of sales. The high growth snack brands will have a smaller yield, but will continue to gain in popularity worldwide: the Oreo brand alone grew 50% in emerging markets and 30% in Europe. Kraft recently beat earnings by 3 cents and reported an 11.5% increase in revenue with upside guidance. The split should boost Kraft's stock price of 20%, and is the best move the company has made since it was spun off by the old version of Philip Morris.
Cramer took some calls:
McDonald's (MCD) is a terrific stock that is down in spite of strong sales. Cramer would buy it.
Darden (DRI) may be considered a value trap, but it might pay to wait for DRI to report a successful quarter with strength in all of its restaurant chains. Cramer noted that he prefers Yum Brands (YUM) and Chipotle Mexican Grill (CMG).
Western Gas Partners (WES) is a great stock for investors looking for a safe haven. While its dividend at 4.7% is lower than other MLPs, it is a safer play because 98% of its business is fee-based, and it is not a hostage to commodities. WES is very likely to raise its distribution in the near future. The company benefits from assets held by its parent company, Anadarko Petroleum (APC), which is unlocking value. The assets are carefully investigated and are high quality, and WES, thanks to APC is levered to high growth areas and is not affected by fluctuations in natural gas price.
Mad Mail: Yandex (NASDAQ:YNDX), MakeMyTrip (NASDAQ:MMYT), Digital Realty Trust (NYSE:DLR), Kinder Morgan (NYSE:KMI), Kinder Morgan Energy Partners (NYSE:KMP), Google (NASDAQ:GOOG), Energy Transfer Partners (NYSE:ETP), AT&T (NYSE:T), Sprint (NYSE:S), Acme Packet (NASDAQ:APKT), Baker Hughes (NYSE:BHI), Schlumberger (NYSE:SLB), Ensco (NYSE:ESV), Edwards Life Sciences (NYSE:EW)
Yandex (YNDX) is the "Google (GOOG) of Russia" and has come down 35% from its IPO. The company is seeing growth and reported a strong quarter, but on November 21 the IPO lockup will expire, and Cramer expects some selling. He might recommend it if it comes down, but he prefers Google.
MakeMyTrip (MMYT) is the largest online travel company in India and could see huge growth, but the multiple at 62 is too rich. Cramer might consider MMYT at a "less chaotic moment" for the markets.
Digital Realty Trust (DLR) is a REIT that owns and manages data centers. It has run up 16% in the last two months and yields just 4.3%, which is low for a REIT. Cramer prefers strong MLPs like Energy Transfer Partners (ETP).
AT&T (T) may be a buy even if the deal with T-Mobile doesn't go through. Sprint (S), while it might do its own deal with T-Mobile if the former deal fails, is not a buy because Cramer suspects it may be overvalued.
Acme Packet (APKT) is too dicey, and Cramer would take profits.
Edwards Life Sciences (EW) is underestimated by The Street, because its heart device is a great non-invasive alternative for open heart surgery; "It will be the ticket for longer life with less pain for a lot of people."
Cisco (NASDAQ:CSCO), EOG Resources (NYSE:EOG), Schlumberger (SLB), National Oilwell Varco (NYSE:NOV), Viacom (NYSE:VIA), Cummins (NYSE:CMI), Caterpillar (NYSE:CAT), Kohl's (NYSE:KSS), Rockwell Automation (NYSE:ROK), Merck (NYSE:MRK), Chimera Investment Corporation (NYSE:CIM), Caterpillar (CAT), Sanofi-Aventis (NYSE:SNY), Annaly Capital (NYSE:NLY), Exelon (NYSE:EXC), Viacom (VIA)
The "absurdly binary nature of this market" was on full display as the Dow surged 113 points after the huge decline on Wednesday. However, there are many stocks worth betting on. Cisco (CSCO) is making a comeback and delivered in its recent quarter. Oil and gas plays are outperforming the S&P 500, most notably EOG Resources (EOG), Schlumberger (SLB) and National Oilwell Varco (NOV). Kohl's (KSS) reported its predictions for a bullish holiday season. Manufacturing stocks like Rockwell Automation (ROK), Cummins (CMI) and Caterpillar (CAT) are doing well in spite of the pain in Europe. Viacom (VIA) reported strong numbers and announced a huge buyback which will actually shrink the float. Merck (MRK) will boost its dividend for the first time in 7 years, by 11%. The company is seeing success with an acquisition, but Cramer prefers Sanofi-Aventis (SNY) for its strong dividend and avoidance of patent problems.
Cramer took some calls:
Exelon (EXC) should see a successful merger and has been one of Cramer's favorites. He gives it two thumbs up.
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