Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday October 9.
CEO Interview: Gary Rodkin, Conagra (NYSE:CAG)
ConAgra (CAG) is the owner of brands that appear on 97% of America's shelves, and most of these brands occupy the number one or the number two position in their respective categories. The company beat earnings by 9 cents, with a 67% increase in revenues, and gave upside guidance. The stock has run 10% since Cramer got behind it in late June, and 60% since he first had CEO Gary Rodkin on Mad Money in 2009. The company has made 6 acquisitions in the past year and execution has been superb.
Gary Rodkin focused on CAG's "Healthy Choice" line of foods, adding that the FDA is quite strict about what brands can be called "healthy"; CAG's "Healthy Choice" is one of the very few brands that meet these standards. CAG has been pro-active in dealing with costs and has seen margin improvement. The company's Research and Development team have become expert at packaging and flavor replacement for the healthy frozen foods, as well as smart microwave trays which make the food taste as if it was taken out of a traditional oven. Single-portion sizes are essential in the healthy food area, because they enable consumers to practice portion control and lose weight. Desserts, such as frozen Greek yogurt, are selling well. Cramer is bullish on CAG, which is seeing outstanding growth.
Momentum Stock Picks for Q4: Visa (NYSE:V), MasterCard (NYSE:MA), J.M. Smucker Company (NYSE:SJM), CarMax (NYSE:KMX), American Express (NYSE:AXP), Wal-Mart (NYSE:WMT).
Cramer continued his week-long series on momentum stocks for Q4 with Visa (V), up 35% year to date, and MasterCard (MA), which has seen a 25% rise so far this year. These companies are not really financials but do represent a secular growth trend from paper to plastic. The majority of payments are still made in cash, and even though PayPal and electronic wallets might replace credit cards, Cramer thinks this is a very gradual trend. Emerging markets have yet to catch up with the use of credit cards, and both companies have significant overseas exposure to take advantage of this development. Visa trades at a multiple of 19 and MasterCard's multiple is 18; both have growth rates of about 19%. It is sometimes difficult to find a decline in these stocks to buy, so Cramer would use deep in the money calls to invest in Visa and MasterCard.
Cramer took some calls:
J.M. Smucker company (SJM) is a great American company, and its problem with limited supply of its coffee canisters is just a temporary logistics issue.
CarMax (KMX) might see a decline after it reports, and that is the time when interested investors should buy.
Some people worry about a "bubble" in dividend stocks, which are becoming like their own sector. Dividend stocks are increasingly being seen as a fixed income alternative for those who would otherwise buy CDs. While Johnson & Johnson (JNJ) has had its problems, the stock has a consistent yield, breakup value, improved management and strong brands. Medical Properties Trust (MPW) is a REIT that yields 7.2% and would also be a great fixed income alternative. Cramer prefers both of these to CDs.
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