Jim Cramer's Mad Money, 11/27/07: Starbucks Cools
Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday November 27. Click on a stock ticker for more analysis:
Abu Dhabi's Next Move: Citigroup (C), JP Morgan (JPM), AIG (AIG), Halliburton (HAL)
Abu Dhabi's purchase of a small stake in Citigroup provided a ray of hope for the devastated banks, but while Cramer envisions similar moves in JP Morgan and AIG, he doesn't recommend these stocks now. Cramer thinks money from the Middle East may pour into Halliburton, which announced plans to relocate from Houston to Dubai. The stock is down 15% in just a few weeks due to its North American pressure pumping business, but its international business has strong prospects. Since Arab countries are "made of oil," they can better appreciate HAL's worth, especially because it can drill in areas that are hard to reach. Its buyback program is the most aggressive of any oil company's, and while the stock is cheap, Cramer thinks has finished falling.
Next on Philip's List: Acuity Brands (AYI)
On yesterday's Mad Money, Cramer discussed Philip Electric's takeover of Genlyte, and he predicts Acuity Brands will be the next item on Philip's wish list. Refitting commercial buildings with more efficient lighting is a major trend, and Cramer notes the nonresidential housing market, which comprises 75% of Acuity's client base, is not suffering.
Starbucks (SBUX) Cools
Analysts disagreed about Starbucks amid an upgrade from Friedman Billings and a downgrade from CIBC. Cramer sided with CIBC, especially since FBR's bullish case sounded bearish, as the analyst cited current challenges faced by the company and suggested a takeover or a management overhaul. While Starbucks was once a growth story, it now suffers from a case of multiple contraction, and Cramer urged investors not to be temped by SBUX's low price, since it is going lower. With SBUX is sitting at $22.61, and should not be touched unless it goes below $16, said Cramer.
Related: 10Q Detective discusses challenges facing Starbucks.
CEO Interview: John Dionisio Aecom (ACM)
John Dionisio wanted to dispel rumors that the company lowered guidance, and said ACM had not delivered guidance until Tuesday. He discussed the company's "very strong year " with its increase in revenue, net income and its seven mergers in 2007 and three acquisitions scheduled for 2008. The CEO also discussed its overseas business. Cramer said this quarter is a "show-me" quarter for ACM, since he was disappointed by the company's growth. "Maybe next time," Cramer said.
Related: Matthew D. McCall thinks ACM is an inexpensive stock.
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