Jim Cramer's Mad Money In-Depth, 3/27/08: Two Marlboro Men

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program,Thursday March 27. Click on a stock ticker for more analysis.

Altria (MO), Philip Morris (PM)

How you play the Friday’s Altria split depends on whether you are a growth or value investor, says Cramer. Altria is the domestic business which offers a 5.2% dividend which may increase to 6.5% next year. Although cigarette sales declined 5% last year, MO has 41% market share. PM will focus on international sales, which is where the growth is, and PM can expect to see 10-12% growth per year and will provide a 3.6% dividend. Cramer thinks MO is a great value stock and PM is a great growth stock.

Alliant Tech (ATK)

As the war in Iraq continues and it appears that troop levels will remain constant, the soldiers will need new supplies of ammunition. Cramer would buy ATK because it produces not only ammunition, but missile launch systems and space technologies. The stock is up 2.5% in a bear market and beat Street estimates by 6 cents per share in the recent quarter. ATK is buying back stock and trades at a mere 13.8 expected 2008 earnings while its growth rate is at 20%. “This group is red hot,” said Cramer.

Sell Block: Liz Claiborne (LIZ), Urban Outfitters (URBN)

Trading in pairs is a smart way to play the market, and Cramer used LIZ and URBN as an example of the technique. URBN is doing everything right with thriving brands, same store sale increases and a smart CEO, Glen Senk. On the other hand, LIZ reported a terrible quarter, with failing brands, decreasing same-store sales, and general misery as Macy’s slashes prices on LIZ products to reassure worried consumers. LIZ had a bit of a bounce on the retail rally, so Cramer would trade LIZ for URBN.

Mad Mail: AK Steel (AKS), U.S. Steel (X), XMSR Satellite Radio (XMSR), Sirius Satellite Radio (SIRI)

Cramer responded to one viewer saying while he likes AKS, he prefers X, because it is cheaper. Another viewer wanted to know why Cramer was recommending SIRI, the less highly valued two companies in the prospective merger. Cramer responded that SIRI has superior management, proposed the merger and is undervalued.

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Comments

[ace22:]

siri is undervalued i dont understand y its selling so low even after the doj opproved the merger?

2008 Mar 28 08:16 AM

[User 169426:]

It's selling lower for 2 reasons.

1.) The FCC has made some comments that make it sound like they could block the merger. Though I don’t think they will.
2.) A lot of the analysts and tv heads have been very short sided saying they still won't be making money after the deal is done. While I agree for the first year or 2 they won't be making money, but once they can start cutting back duplicate channels and support equipment I think they will start to make money hand over fist.

just my thoughts on the subject.

2008 Mar 28 09:29 AM

[User 168418:]

ITS ONLY A MATTER OF TIME UNTIL THIS STOCK POPS. I THINK THE BIG TRADERS ARE DAY TRADING IT BIG TIME AND MAKING BIG BUCKS DOING SO. I THINK THE FCC WILL CLOSE THE DEAL VERY SOON!!!!

2008 Mar 28 11:46 AM