Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday August 9.
Cramer thinks triple-digit share prices, even in the best stocks, intimidate investors and called for a 10-1 split in Goldman Sachs (GS), Apple (AAPL), Chipotle Mexican Grill (CMG), Netflix (NFLX), Google (GOOG), Amazon (AMZN) so the stocks will be more investor-friendly. Since he thinks this is unlikely to happen, Cramer suggested viewers divide the share price of the stocks by 10 and see if they felt more at ease. He emphasized that share prices do not indicate the value of the stock, but the price-to-earnings ratio, or the multiple, gives a more accurate picture of a company. A 3.8% loss or gain is a 3.8% loss or gain regardless of the stock price, and people shouldn't think it is a waste of time to buy just 2 or 3 shares of a stock with a triple-digit price if it is a good growth stock. He recommended using deep-in-the-money call options as protection against downside.
Cramer wished a happy first-year anniversary to his Mobile Internet Index as a measure of this mega-trend he often refers to as the "mobile internet tsunami." Since last August, the index is up 29% compared to a 13% rise in the S&P 500. Some changes have to be made in the index; Palm (PALM) has been bought by Hewlett Packard (HPQ) and ADC Communications (ADCT) may soon be taken over. Cramer would take gains in ADC Communications and buy Acme Packet (AKPT), which makes equipment that delivers voice and video more smoothly and quickly over the internet. Cramer says it is as if the company make secure bridges for the internet superhighway. AcmePacket controls 50%of this $2 billion market, and has 4 times more market share than its closest competitor.
Its Infonetics business has grown 53% since 2009, and Acme Packet expects a 44% growth in the business this year. The company is also developing multi-service gateways which more efficiently connect customers with internet services. Acme Packet has some successful contracts, is growing steadily in China and has more than 10% of its business from Verizon (VZ) which needs the technology. While the stock was up 4% on Monday, it had previously been brought down substantially after its earnings call, even though it beat on revenues and reported record gross margins. Cramer thinks expections for the stock were unfairly high and would buy Acme Packet with 26% growth rate and a multiple of 22. Cramer wouldn't chase the stock, but would wait for the next dip.
Express Scripts (NASDAQ:ESRX)
Express Scripts has sold off after its strong quarter, and Cramer would use this decline as a buying opportunity. Cramer thinks this 14% decline was profit taking before the stock runs higher: "I don't take my cue from the tape, I take my cue from the fundamentals." Express Scripts bargains to get lower prescription prices for its customers, and has a 95% customer retention rate, and the ability to set competitive prices because of its astute acquisitions. However, the bears are have been relentless against Express Scripts, even though earnings were up and its latest acquisition is now fully integrated. The stock has a 20% growth rate and a multiple of 14; Cramer thinks the stock is cheap.
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