Cramer's Mad Money - Priceline Is The Only Game In Town (3/22/12)

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Includes: ADM, AXP, BEAM, CAT, CMG, CRZO, DAL, DD, DEO, DG, DVMT, EXPE, FDO, FDX, FHN, IBM, KO, LNKD, LULU, MCD, OWW, PCLN, PEP, SBUX, TZOO, YUM
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 22.

Priceline (NASDAQ:PCLN), Expedia (NASDAQ:EXPE), Orbitz Worldwide (NYSE:OWW), Travelzoo (NASDAQ:TZOO), Delta Air Lines (NYSE:DAL), American Express (NYSE:AXP)

Priceline.com (PCLN) just hit a new high, and is the most successful online travel company out there. What distinguishes PCLN from other online travel companies like Expedia (EXPE), Orbitz Worldwide (OWW) and Travelzoo (TZOO)? PCLN goes where the growth is and has the best execution. The company continues to take market share and has the most international exposure. The market is becoming saturated in the U.S. and PCLN saw this coming; it was a first-mover into Europe and emerging markets, and gets 78% of its bookings from overseas. The company beat earnings by 33 cents and had 52% bookings growth. Expedia is a distant second, with 63% of its bookings overseas. It is upgrading its platform and building out its overseas business, but is way behind PCLN in this development. Orbitz takes 75% of its reservations from the U.S. and is dependent on airline bookings, which do not produce great revenues. PCLN trades at a multiple of 18 with a 22% growth rate; although PCLN's multiple is higher than the others, its growth rate makes up for it. Travelzoo (TZOO) doesn't take reservations but advertises deals to its subscribers. This business model is easy to imitate and makes it vulnerable to competition. Cramer thinks Priceline is the only game in town for internet travel.

Cramer took some calls:

Delta (DAL) is not Cramer's favorite, since it is an airline stock, and he does not recommend airline stocks. He told the caller that he doesn't see oil prices coming down, so there is no reason to buy DAL.

American Express (AXP) is hated by analysts, since they don't understand AXP's growth: "AXP doesn't get its due. That is wrong."

Caterpillar (NYSE:CAT), FedEx (NYSE:FDX), EMC (EMC), IBM (NYSE:IBM), LinkedIn (NYSE:LNKD), Starbucks (NASDAQ:SBUX), Yum (NYSE:YUM), Chipotle Mexican Grill (NYSE:CMG), Lululemon (NASDAQ:LULU), McDonald's (NYSE:MCD), Dollar General (NYSE:DG), Family Dollar (NYSE:FDO), Beam (NYSE:BEAM), Coca-Cola (NYSE:KO), Pepsi (NYSE:PEP), Diageo (NYSE:DEO) Archer Daniels Midland (NYSE:ADM), Dupont (NYSE:DD)

On Thursday, stocks associated with China got punished on news of slowness in the Chinese economy; mining, industrial and minerals stocks were down. Cramer thinks sellers of Caterpillar (CAT) will regret not holding onto the stock in the near future; even after the selloff CAT is still up 17 points. Oil plays were also hit, but Cramer doesn't see a long-term decline in oil. Transports suffered because of negative news from FedEx (FDX). Cramer pointed out that FedEx tends to blow away numbers and then says gloomy things. The rotation was into tech, with strong performances from IBM (IBM), EMC (EMC) and LinkedIn (LNKD). Food and retail stocks were strong, even companies with strong exposure to China like Starbucks (SBUX) and YUM (YUM). Chipotle Mexican Grill (CMG) and Lululemon (LULU) saw 52 week highs. McDonald's (MCD) performed well, in spite of the announcement of CEO Jim Skinner's retirement. Dollar General (DG) reported a strong quarter and sent up other stocks in the sector, including Family Dollar (FDO). Drink stocks Coke (KO), Pepsi (PEP), Diageo (DEO) and Beam (BEAM) rose on Thursday.

Cramer took some calls:

Archer Daniels Midland (ADM) has been stalled at the same price for a long time. Cramer would switch to Dupont (DD).

CEO Interview: Chip Johnson, Carrizo Oil & Gas (NASDAQ:CRZO)

The pullback in oil on Thursday may be a buying opportunity for oil stocks, since oil prices are expected to go up, not down, for the long-term. Carrizo Oil & Gas (CRZO) fell 5.1%, and may be a buying opportunity, since it is successfully transforming itself from a natural gas to an oil play. The company has increased its oil production by 300%. CEO Chip Johnson says currently 60% of the company's revenues come from oil, and by the end of the year, the number should grow to 80%. When Cramer asked if the company is selling its natural gas assets at a lower price than it could have fetched earlier, Johnson responded that since the company is mainly focused on growth, it is willing to make the sacrifice selling its natural gas assets at current prices to free up more cash for oil. Cramer thinks CRZO is trading at a dramatic discount to its book value.

CEO Brian Jordan, First Horizon National (NYSE:FHN)

Banks have pulled back after a rally, but Cramer thinks they are only resting before a move higher. Regional banks are the best ways to play the resurgence of employment and housing. First Horizon (FHN) was downgraded because it has run up 30% yoy, but the company unveiled a $100 million buyback. The stock is up 15% since Cramer recommended it in January. CEO Brian Jordan said the company is on the backside of a mortgage repurchase program that has been a headwind for earnings for a few years. In two years, FHN no longer has to deal with this expense and its earnings should be stronger. The company is cutting costs and has a strong balance sheet. Currently, the Fed restricts the company's dividend payout ratio to 30%, and since the mortgage repurchases have been a drag on earnings, FHN has not been able to raise its dividends, but has returned value to shareholders through buybacks. Jordan is confident that FHN will be able to raise its dividend once this obstacle is lifted.

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