Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 30.
Top 5 CEOs: Starbucks (NASDAQ:SBUX), Facebook (NASDAQ:FB), Oracle (NYSE:ORCL), Google (NASDAQ:GOOG), (NASDAQ:GOOGL), Berkshire Hathaway (NYSE:BRK.A), (NYSE:BRK.B). Other stocks mentioned: Apple (NASDAQ:AAPL), PepsiCo (NASDAQ:PEP), Herbalife (NYSE:HLF), Winnebago (NYSE:WGO), Hain Celestial (NASDAQ:HAIN), Wal-Mart (NYSE:WMT), WhiteWave (NYSE:WWAV), Twitter (NYSE:TWTR)
Cramer wished CNBC a happy 25th birthday on a day the Dow closed up 45 points to a record high. Cramer discussed 5 companies worth betting on with great CEOs.
1. Howard Schultz. Starbucks (SBUX) reported a smashing quarter with same store sales "better than almost any retailer," Cramer follows. The fact the stock is stalled may be a buying opportunity. The company develops mobile initiatives that put it light years ahead of the competition. SBUX offers "disruptive tea" options, including Oprah Chai. SBUX is innovating with drive-thrus, lunch initiatives and beer and wine offerings in the evenings. SBUX sells at 26 times earnings, but it might be worth paying up for this company.
2. Mark Zuckerberg. Facebook (FB) is trouncing Twitter (TWTR) with strong earnings per share. For all of its success, FB sells at only a slight premium to the S&P 500. While FB might have spent "too much" money on WhatsApp, the acquisition is likely to pay off eventually. Cramer thinks it is a buy.
3. Larry Ellison. Oracle (ORCL) has had some "off-putting" turmoil, but the stock is back. With a multiple of 14 times earnings and its embrace of the cloud, the stock may be a buy. Given news that Ellison might buy the Clippers, some are worried that sports will take too much attention from his management of Oracle or the team may have too high a price tag. Given his "salient acumen," and abundant personal wealth, Ellison will be able to devote attention to both Oracle and the Clippers if he buys the team.
4. Serge Brin, Larry Page, Eric Schmidt. Google (GOOG), (GOOGL) is "kind of sticky." The quarter was wildly profitable, but it still didn't quite deliver. The company invests in "too many extraneous things," but it still trades at a relatively low multiple
Honorary Mention: If Carl Ichan likes a company, it pays to like it too. Apple (AAPL), Herbalife (HLF) and PepsiCo (PEP) are examples of companies whose stocks have seen an upside thanks to Icahn, but it pays to be a prophet and get in at the same time as Icahn, because once he is involved, it is often too late.
Cramer took some calls:
Winnebago (WGO) ran, has pulled back dramatically and tends to trade off its quarterly report. It is "okay," but Cramer says he won't pound the table on it.
Hain Celestial (HAIN) is in a tough market, and HAIN is regarded as an expensive stock. There is worry about competition from Wal-Mart (WMT). There is a strong case to be made for Hain long term, but Cramer prefers White Wave (WWAV).
This market has no mercy for even the best momentum stocks. Concur Technologies is one of the largest pure-play software-as-a-service vendors. The company provides companies with cost-saving corporate travel and expense management software. The company has a $12 billion total addressable market, but it is down 30% from its highs two months ago.
The company reported a one cent earnings beat, higher than expected revenues and reaffirmed guidance, but the stock dropped 3% in a single session. The fault lies at the feet of sector rotation. Cramer thinks CNQR could ultimately rebound, and it is cheaper than its peers. CEO Steve Singh said, "We are delivering great value to customers," and the business continues to grow. Cramer noted the lack of competition in CNQR's specific segment. "We are becoming ubiquitous." CNQR helps clients like the NY Yankees, the Mets and others control their costs. CNQR has a partnership with American Express (AXP) to make tracking expenses easier. Cramer thinks CNQR might have farther to fall, but it may be one of the first in the sector to make a comeback.
What makes a good conference call? How can it help investors decide whether to buy or sell a stock? 3M (MMM) CEO, Inge Thulin gives "everything you need to know in a clear and concise fashion." 3M has been rallying as a recipient of the sector rotation from hot momentum stocks into industrials. 3M is great long-term "core portfolio position."
The first quarter saw organic growth in all segments in all geographic areas. The fact that the CEO said "all geographic areas" shows the company has transcended local issues. The CEO pointed out that the company focuses on research and development and returning money to shareholders. Thulin discussed record sales, earnings growth and organic growth (to make it clear that 3M is not growing only through acquisitions).
The company had great growth overseas, but the U.S. saw a mere 3% increase. Thulin explained the reason for the shortfall, which was related to weather and delivery problems, later in the call. 3M saw margin improvement off of a very high base. 3M is committed to the dividend at 2.3% and boosted it substantially, and reaffirmed the guidance, which management couldn't raise because of currency issues. Management discussed organic growth as a main priority and the possibility of an acquisition. "Innovation is the heartbeat of 3M," said the CEO. "It is the key to our long track record of generating premium returns throughout the business." A third of the revenue came from products created in the last 5 years. Every conference call should be like 3M's, commented Cramer.
Cramer took some calls:
Himax (HIMX) "We recommended it as a trade, we left that trade. I don't have a catalyst to recommend it now."
CEO Interview: Andy Mooney, Quiksilver (NYSE:ZQK)
Quiksilver (ZQK) is a teen apparel retailer and has been a rollercoaster stock. The teen retail space is "inherently treacherous," said Cramer, but the CEO has a game plan to reduce the number of products by 30%, cut overhead by 20%, improve its marketing and product design process. "It is not going to be an overnight success story, but it is going to be a long-term proposition," said CEO Andy Mooney. ZQK has significant debt, but it is manageable, says Mooney. He discussed the "brutal" retail environment, and challenges with teen retail in particular, although Mooney doesn't consider ZQK a specifically "teen" play, since many consumers are in their early 20s. Cramer would keep an eye on ZQK for a turnaround.
2 Deadly Things: Competition and Spending. Stocks discussed: Whole Foods (WFM), eBay (NASDAQ:EBAY), 3D Systems (NYSE:DDD), Under Armour (NYSE:UA), Nike (NYSE:NKE), Lululemon (NASDAQ:LULU), Microsoft (NASDAQ:MSFT), IBM (NYSE:IBM)
Two things that have been deadly during earnings season are spending and competition. eBay's (EBAY) monumental decline "took my breath away," said Cramer. Management blamed the "competitive dynamic." 3D (DDD) got pummeled, because not only does it lack a moat, "it doesn't even have a picket fence." Whole Foods (WFM) is facing stiff competition. Under Armour (UA) is biting Nike's (NKE) heels with not only products but with price. "I don't want to go near Lululemon (LULU) either," said Cramer. Too much spending, not enough revenue growth is to blame. Larger tech companies are building out cloud and may eliminate competition from fresh-faced cloud IPOs. Oracle (ORCL), Microsoft (MSFT) and IBM (IBM) mean it when they say they are seriously developing their cloud segments. Companies that have to spend to compete are an "anathema to the market right now." Defense, consumer goods and big pharma may be buys right now.
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