TUP Up - Cramer's Mad Money (7/24/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Thursday, July 24.

“On days like today, you need to look for the positives,” Jim Cramer told viewers of his Mad Money TV show Thursday. He said that today's market decline was primarily due to profit taking in the financial sector, but reminded viewers that there are always something positive on down days.  

Bright Spot: Walt Disney (DIS)

Despite a 283-point drop in the Dow, $300 billion is going to the Federal Housing Administration to help bail out struggling homeowners, and more importantly gas prices continue to fall and fall hard, he said. That's why he's looking for stocks that will benefit from falling fuel prices.  According to Cramer, that stock is Walt Disney. Despite being beaten up by the market and analysts over fears of rising airfares, Cramer said he's turning negatives into positives by looking closer at Disney's business. While Cramer agreed that airfares are rising, he pointed to a recent study which stated that auto traffic to Disney World has been steadily increasing, not decreasing. “The analysts are only counting airplanes,” he said.  In addition, room rates around Disney World have been falling, with 75% of rooms now being classified as moderate to value in price. Furthermore, Cramer said the weak U.S. dollar makes traveling to Disney World cheaper for the rest of the world.  He likes Disney's other businesses such as ESPN, a premium cable property that is doing exceptionally well. He called the analysts “way behind the curve” in their estimates for the stock. “Disney is all about franchises,” said Cramer. While Disney World may be experiencing a decline in attendance, Disney is working on new ones like Wall-E, High School Musical and Hanna Montana, he said. He recommended buying Disney on any weakness, especially if it falls below $30 a share.

Tupperware's Successful Transition: Tupperware (TUP)

Cramer recommended Tupperware as another company poised to take advantage of falling gas prices. Since he first recommended the stock on Oct. 8, 2006, shares of the company are up 96%. Cramer called Tupperware a defensive stock, because it's not a traditional retailer. In times of higher unemployment, more people turn to the company's direct sales model for additional income, which translates into higher sales for the company. And with only 17% of the company's costs tied to oil-based resins, lower crude prices mean higher margins.  That means happier days are here again for Tupperware.

Cramer invited Tupperware chairman and CEO Rick Goings to the show to confirm his thesis. Goings confirmed that the company's guidance today was indeed conservative and didn't take into account any drop in resin prices.

The company issued earnings guidance of between 37 cents to 42 cents a share, slightly below the 46 cents a share that analysts were expecting. But Cramer said he's not worried because he sees it as a classic case in which Tupperware can under-promise and over-deliver.  Goings touted Tupperware's diversification as one of its primary strengths. The company is making a successful transition from its core business into a global portfolio of direct selling businesses. The company owns seven beauty companies, he said, and 50% of Tupperware's profits now come from emerging markets.  There remains a great deal of upside in those markets.

In fact, Goings said that there are more Tupperware representatives in Latin America than in the U.S. He said China, Indonesia and Malaysia are also areas of strength for the company, adding the U.S. only accounts for 15% of the company's sales.

Cramer confirmed his support for Tupperware and re-recommended buying the stock.

Martha's Off the Sell Block: Martha Stewart Living Omnimedia (MSO), Wal-Mart (WMT), Costco (COST), KB Home (KBH)

In the Thursday Sell Block segment, Cramer relented, and released Martha Stewart Living Omnimedia from prison and recommended buying the stock. Cramer, who had been negative on the company for years, said he now feels MSO is poised for a turnaround.

Cramer acknowledged all of the company's negatives, including softening magazine revenues, CEO Susan Lyon's recent departure from the company, partner K-mart canceling its contract with the company, and the fact that Martha herself is too involved in the company. But, he said, “all of these facts can positives as well.” Cramer sees Martha Stewart Living as a turnaround play from just a publisher to a merchandising powerhouse. He welcomed Susan Lyons' resignation, saying that it's time for someone new at the helm. Cramer welcomed Charles Koppelman as the company's new CEO.

Cramer offered praise to Martha herself, saying that Martha has always done an amazing job for the company. He said that Martha's involvement in the company should not be seen as a negative.

Cramer also noted several other positives at MSO, including new merchandising deals with Wal-Mart, Costco and a continued partnership with KB Homes. He also said the company's expansion overseas is strong. “There is no better sign of a bottom than universal negativity,” said Cramer. While he did not recommending buying the stock before the company reports next week, he did advocate buying in under $8 a share.

Does the Rally have Legs? (QCOM), Nokia (NOK)

Caller asks: “In light of Qualcom’s legal truce with Nokia do you think this rally has legs?” 

Cramer says: “I think this has much further to go.” 3G and 4G should be a boon to Qualcomm’s business. “I think it goes much higher. Any weakness, I know I’m going to buy it for my [charitable] trust.”

Boeing (BA) or Northrop Grumman (NOC)?

Caller says: “I am considering buying Boeing or Northrup Grumman…”

Cramer says: “Boeing is being hurt by a perception that airlines won’t buy any planes anymore. Northrop Grumman is being hurt by a belief that Obama wins and he dismantles the military industrial complex. I say put your money on Northrop. It’s got steadier cash flow. And Boeing is just so hated that every time oil ticks up, the stock seems to go down $2 or $3. That one’s too hard to own.”

Peabody Energy (BTU)

Caller asks: “Why on earth would you say to sell Peabody Energy because of Boone Pickens and his clean-energy plan? Pickens' plan isn't going into effect tomorrow!”

Cramer says: “What I was trying to do is cut back on some of the exposure that I’ve been recommending in energy. I can’t be recommending all this energy because I believe that oil is going to $110, $120. If that’s the case, I can’t be in coal. I had to take something off the table. I wish I had taken it all off the table, but I still believe in natural gas and in oil service.”

 Mad Mail

Qualcomm (QCOM) -- Cramer says Qualcomm is going much higher.

Boeing (BA) -- “I am not a fan of Boeing.”

Northrop Grumman (NOC) -- “I would consider Northrop Grumman.”

Peabody Energy (BTU) -- Cramer defended his call to sell. “I can't have people too exposed to the energy sector with fuel pricing falling.”

Sudden Death

Cramer is bullish on Anadarko Petroleum (APC), Exelon (EXC).

Cramer is bearish on Focus Media (FMCN). 

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