Yum Is Cooking in China, Cramer's Mad Money (4/29/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday April 29. Click on a stock ticker for more analysis.

CEO Interview: David Novak, Yum! Brands (YUM)

Yum is taking China by storm and the result is fantastic earnings this quarter and the stock is approaching its 52-week high. Yum beat estimates by 2 cents a share and the stock is up 65% since Cramer recommended it in October 2005. There are already 3,000 stores in China, and Novak expects the number to exceed the 18,000 restaurants in America. Although China suffers from inflation, Yum has avoided this problem through its aggressive sales and growing number of stores. Domestically, Yum will add new items to its menus including pasta at Pizza Hut and grilled chicken at KFC.

CEO Interview: Donald Washkewicz, Parker Hannifin (PH)

Cramer continued a theme he started Monday that American manufacturing is the new tech sector. Manufacturing stocks are performing better than expected because of innovations and a weak dollar. The most successful companies, like PH, do most of their business abroad: 55% of PH’s sales come from overseas. PH is currently developing a hydraulic system for garbage trucks that will use 50% less energy. “This is not your grandfather’s Parker Hannifin,” CEO Donald Washkewicz said. “We’re just at the early stages of this development. I think you’re going to see a lot more exciting things happen as we go forward down the road.” Although 16 analysts cover the stock, only 4 call it a buy, the rest say it is a hold; Cramer says these analysts need to wake up. He notes PH trades at 12x earnings with a 19% growth rate, and Cramer would buy PH.

CEO Interview: Gary Rodkin, Conagra (CAG)

Cramer was baffled that CAG doesn’t seem to be working, especially when its brands are so ubiquitous and after it dumped its volatile commodities trading division. Rodkin expressed confidence that his company will thrive because of its well-known brands, cost containment strategies and pipeline of new products. He said the spinning off of the commodities division has not been completed yet, but when it is finished, he expects to see an upside in the company. Although the environment for food is tough right now, and Cramer concluded, “If you think that we are at a peak in the price of food, you buy ConAgra. If you don’t, you can’t pull the trigger.”

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