Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday September 6.
Manchester United (MANU) is a cool stock that is exciting to many investors, because it concerns something of abiding interest: a major sports team. However, Cramer would prefer viewers spend their money on tickets to a game or a Manchester United jersey rather than buying the stock. The bulls argue the stock is a mini-media empire, with broadcasting, merchandizing and sponsorship possibilities, but Cramer would put the stock on the Sell Block. Something seemed amiss from the first day of MANU's IPO when the stock didn't budge from its $14 mark; usually IPOs, especially "hot" ones, have a dramatic first day pop. The stock is priced for perfection with a multiple of 38 with a mere 12% growth rate. The fact that the revenues depend on the team having a good year makes the story a very risky and volatile one. The company is swimming in debt, and on close inspection, does not have strong fundamentals.
Cramer took some calls:
Under Armour (UA) is a great stock, but Cramer would avoid buying it at its current all-time high. For investors who just can't wait, he might consider buying 25% of a position now and wait for it to drop before buying more.
Pepsico (PEP) has strong earnings that are going to go higher. Cramer would buy some PEP now and more when it goes lower.
What Is Bad For Us Might Be Good For Business: AAR (NYSE:AIR), American Realty Capital (NASDAQ:ARCT), SanDisk (NASDAQ:SNDK)
With the Dow rallying 245 points on Thursday, Cramer posed the question of how businesses can be doing so well when individuals do not seem so content about the economic situation. While unemployment rates rise, individuals might direct their dissatisfaction to the polls, but Cramer urged viewers not to let this influence their investing decisions. While cutting jobs might be bad for individuals, it can be a good move for companies. Cutbacks that can improve gross margins might cause personal misery, but it is a partial explanation of how companies are reporting strong earnings while the unemployment rate rises. "You might not be better off," said Cramer, "but some businesses might be better off."
Cramer took some calls:
AAR (AIR) is a strong company and has moved 10% on the aerospace bull market.
American Realty Capital (ARCT) is a strong REIT that Cramer would hold onto, but would wait for a decline before buying.
SanDisk (SNDK) is developing new flash technology, but has a lot of shorts. Cramer thinks the short position is excessive, and likes SNDK, but prefers other stocks. However, for investors who want to hold it, "I'm not going to fight it."
Cramer spoke to Phillips-Van Heusen (PVH) CEO Emmanuel Chirico at the flagship Tommy Hilfiger store in New York City. PVH is at a 52 week high, and has reported double digit revenue growth in Europe and the U.S. The stock has gained 140% since Cramer got behind it in 2008 and has risen 22% since the last time the CEO appeared on Mad Money. While Tommy Hilfiger and Calvin Klein are the main drivers of growth, the Heritage and Izod brands are showing renewed strength. J.C. Penney (JCP) has been a challenged company, but Chirico is confident that JCP CEO Ron Johnson can face the rocky issues and that the Johnson "understands what they need to do. We are being as supportive as we can" with the promotion of Izod and Van Heusen brands in JCP stores. Macy's (M) has been "hitting the ball out of the park," helped by the fact that Tommy Hilfiger and Calvin Klein are among the top brands at Macy's.
PVH is benefiting from lower raw costs and is expecting a 200 basis point improvement in gross margins. Inventories are lean, not only in the PVH channel, but for its products among its retailers. While jeans and underwear are weak areas currently, Tommy Hilfiger and Calvin Klein brands are growing 12-15%. Chirico discussed the importance of flagship stores in major cities such as New York, Berlin, Paris and Tokyo; these flagship stores are "brand builders" and market the products more effectively than a billboard can. The stores also express how well the brand is positioned and regarded.
An astounding 50-75% of men's dress shirts and neckware sold in major department stores are PVH products. The company owns the 3 top brands in men's dress shirts; the segment is "a cash machine for us," said Chirico. Business in Asia is growing rapidly at 10% and continues to expand in emerging markets. Cramer said PVH is "one of the best-performing stocks we've had on Mad Money."
The battle between Apple (AAPL) and Amazon (AMZN) over the iPad and the Kindle may have no casualties. Cramer thinks there is room enough for both companies with the seemingly endless demand for their products. He resists pitting one against the other, instead, he thinks both stocks are winners.
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