Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 11.
Sherwin Williams (NYSE:SHW), VFCorp (NYSE:VFC), Phillips-Van Heusen (NYSE:PVH), Alcoa (NYSE:AA), Owens Illinois (NYSE:OI), Clean Energy Fuels (NASDAQ:CLNE), Wesport Innovations (NASDAQ:WPRT), Travelzoo (NASDAQ:TZOO), SBA Communications (NASDAQ:SBAC)
When stocks go up, the pessimists try to explain away the good news to paint the picture as more bearish than it is. Cramer used the example of Sherwin Williams (SHW); the bears said the 20% gain in sales was due to warmer weather, but on close investigation, the rise in paint sales was for painting interiors, not exteriors, so warmer weather actually had nothing to do with the gain. After an initial dip, SHW rose $5.83 to close at a 52 week high. All winter, bears were telling investors to sell VFCorp (VFC) because of worries about its North Face brand, given the mild weather, but VFC managed to sell a lot of North Face products.
It was said that Phillips-Van Heusens's (PVH) strong sales were also because of the weather, and that it would see a shortfall in coming months. However, this shortfall didn't happen, and PVH was a strong performer during periods when bears predicted declines. Owens Illinois (OI) reported strong sales because of rising demand for glass, and Alcoa (AA) gave a surprisingly strong quarter because of the increased need for aluminum for autos and planes; "Sometimes stocks go up simply because they deserve to go up," said Cramer.
Cramer took some calls:
Clean Energy Fuels (CLNE) and Westport (WPRT) are good speculative stocks, but they have had significant runs, and Cramer would buy them with caution. He thinks SBA Communications (SBAC) is a good long-term investment
TravelZoo (TZOO) is an unequivocal "sell."
CEO Interview: Kelsey Warren: Energy Transfer Partners (NYSE:ETP)
Master Limited Partnerships offer conservative growth with huge distributions, but many pipeline MLPs have risen to high levels. Cramer thinks Energy Transfer Partners (ETP), which is out of favor on The Street and has hardly seen gains this year, may be a buy at current levels. ETP has a 7.7% distribution, and CEO Kelsey Warren says he wants to continue raising it. While natural gas prices are falling, Warren says the business, which is fee-based, is still healthy, although he wants to diversify into oil and more liquid gas.
The company is acquiring Southern Union, which should provide a lot of assets for ETP. Warren discussed the possibility of an equity offering, and says such strategies have worked well in the past. Warren believes natural gas has a future as a fuel for surface vehicles in the U.S, but the natural gas companies are too competitive to tell a unified story about the fuel to the public and to Washington. Cramer is bullish on ETP, especially for its yield.
Ross Stores (NASDAQ:ROST), TJX (NYSE:TJX), Teavana (TEA), VMWare (NYSE:VMW), EMC (NYSE:EMC), Healthstream (NASDAQ:HSTM)
Cramer discussed a secular growth stock, Ross Stores (ROST), according to the following criteria:
1. ROST has multiple years of growth ahead. It has already reported a 10% rise in same store sales, double what the analysts expected, and expects to double its store count at a rate of 6% per year. One-third of these stores will be in new markets, since the company is currently located in the South and the West, it has more room in the country to expand.
2. The end market is big enough for ROST to expand it and grab market share.
3. With ROST and TJX (TJX) in a two-horse race for discount apparel, ROST can continue to take market share and manage its merchandise.
4. The company raised its dividend by 27%, and while the yield is still small, that is partly due to the run it has had.
5. While ROST has not yet expanded internationally, it has more room to grow at home.
6. ROST's balance sheet is clean and it has healthy cash flow.
7. The stock is extremely cheap and trades at a multiple of 15.6 with a 15% growth rate.
8. Management has a proven track record of execution, with ROST up 3,450% since 1996 and up 40% since October.
9. ROST actually benefits from economic slowdowns, as it is the place bargain hunters shop.
10. ROST has been able to deal with input costs and has grown its gross margins by 10 basis points.
Cramer would buy ROST but would wait for a pullback.
Cramer took some calls:
Teavana (TEA) didn't report a strong quarter and didn't give a strong outlook. Cramer thinks TEA is merely a purveyor of expensive teapots and doesn't have much of a story.
Healthstream (HSTM) has a 20% growth rate, but trades at a multiple of 72 and is "too hot for me," said Cramer.
It can sometimes be hard to distinguish between a value stock and a value trap, but in Nokia's (NOK) case, it is pretty clear that its best days are behind it. The company keeps promising a better smartphone, but has not made good on its promises. Nokia can't hope to compete with Apple (AAPL) and Samsung. Basically, bottom fishing in Nokia isn't worth it.
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