Herbalife's Unwholesome Scandals - Cramer's Mad Money (5/20/08)

 |  Includes: CMI, EMR, ETN, FSLR, GLW, HLF, NAV, NYX, PH
by: Miriam Metzinger

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday May 20.


Parker-Hannifin (NYSE:PH), Eaton (NYSE:ETN), First Solar (NASDAQ:FSLR), Emerson (NYSE:EMR)


In a volatile market, Cramer suggests sticking with bullish themes that have a future. Instead of investing in a company that wants to perfect the next cool gadget, Cramer once again touted "new tech" stocks which can solve real problems such as energy, food, water, the environment, poverty, fighting terrorism, disease and education. PH, ETN, FSLR and EMR are developing new technologies to tackle global challenges. Cramer singled out PH for its generous, safe dividend.

Navistar International (NAVZ), Cummins (NYSE:CMI)

Navistar, which has 60% market share of school buses and trucks is Cramer's favorite in the industry after CMI. NAVZ is developing hybrid diesel engines which can reduce fuel costs by 9-13% and its military division could earn $2 billion. The biggest catalyst is the company's relisting on the New York Stock Exchange. NAVZ was delisted a few years ago after facing accounting problems but should return to the exchange any week now. Cramer thinks this story is similar to Terex's which saw a doubling of its share price after cleaning up its accounting problems. Cramer predicts NAVZ, which trades at a mere 7.7 times forward earnings will jump to $104, a 51% bounce.

CEO Interview: Michael Johnson: Herbalife (NYSE:HLF)

Herbalife may be popular the world over, but controversy is perhaps making the stock a bit too hot. Recently, the COO resigned after inconsistencies were found on his resume, The Fraud Discovery Institute said the company should have warnings about lead content and Spain's Ministry of Health is concerned about the products because of alleged cases of hepatic toxicity. Michael Johnson says all of the concerns are overblown, and other brands besides Herbalife contain traces of lead. The issue of hepatic toxicity may be traced to allergies in individual customers. Johnson adds that Herbalife products have never been recalled, and his own family takes them. Cramer, however, is skeptical, and thinks that the controversies, even if exaggerated, might harm the stock.

Mad Mail: NYSE Euronext (NYSE:NYX), Corning (NYSE:GLW)

Cramer said it would be easier for him to land a role in Ironman 2 than for NYX to get above $70, since it has "no sponsorship whatsoever." However, he would buy the stock on a pullback because he still believes in the story. Cramer told the next viewer GLW is the best way to play HDTV.


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