Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 29.
CEO Marty Mucci, Paychex (PAYX)
Paychex (PAYX) is the second largest payroll management company that pays investors to wait with a 4% dividend. Some are concerned that the passage of Obamacare could limit hiring, which would not be good news for Paychex. CEO Marty Mucci says the company has a contingency plan in this event, and if Obamacare is overturned, there could be more demand for healthcare plans from PAYX. The company reported an in-line quarter and reaffirmed guidance. Checks per payroll improved for the 8th straight quarter. Service revenue was up 85% and checks per payroll were strong. While new business starts are still pretty flat, "We made up for it in other channels," said Mucci. The company is developing new products to use with iPads and smartphones. Cramer disagrees with Morgan Stanley's downgrade of PAYX, and says the company has a lot of moving parts that are working.
Cramer discussed his favorite plays on big data, starting with Red Hat (RHT), which reported a knockout quarter, rising 19.5% after its earnings. He had recommended that viewers buy RHT ahead of the quarter and on strong numbers, particularly 31% billings growth, RHT was certainly worth buying. He would also consider EMC (EMC), maker of storage hardware and owner of 80% of VMware (VMW). EMC may be close to its 52 week high, but the stock trades at a multiple of 14 with a 15% growth rate, and should see more upside. IBM (IBM) analyzes data and understand the enterprise space better than anyone else. The stock trades at around $200, but considering that IBM expects to earn $20 a share, this is not a high price tag. Teradata (TDC) is a pure data warehousing outfit that has accelerated revenue growth and whose share price has risen 84% over the last year. The stock trades at a multiple of 22, but has a 15% growth rate. Other good big data plays are Salesforce.com (CRM), SAP (SAP) and Tibco (TIBX).
A tragic accident of the Costa Concordia in January which involved 30 fatalities, the destruction of a Carnival Corporation (CCL) ship and the company's reputation brought CCL's stock down 14%. Royal Caribbean fell 6% on the news. Cramer thinks, even three months after the tragedy, it might be time to buy CCL again, which he thinks is the superior of the two stocks. CCL and RCL together have control over 75% of the cruise ship industry and can afford to charge elevated prices, given the lack of competition and the high barriers to entry. In spite of the tragedy, CCL beat The Street's earnings estimates by 9 cents when it reported in March, although it lowered guidance on rising gas prices. CCL has a yield of 3.1%, while RCL has a much smaller dividend of 1.3%. The charts indicate that the stocks may see an uptrend, and Cramer thinks now is a good time to buy CCL, but investors need not rush.
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