Cramer's Mad Money - Crossing the Rubicon (8/19/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV program, Thursday August 19.


Cramer discussed two "profoundly misunderstood" and unfairly punished plays on LED lighting: Cree (CREE) and Rubicon (RBCN). These stocks are in a potential bull market: $50 billion worth of bulbs need to be changed to LED lights under energy efficiency legislation. Cree took a 13% pounding in spite of a 4 cent earnings beat and raised guidance. The stock trades at 17 times next year's earnings with a 25% growth rate, a level Cramer thinks is cheap.

Rubicon is the only pure play on sapphire wafers for the LED industry. These wafers are hard to find and produce, and Rubicon has 23% market share. The company was just rewarded a $71 million contract for wafers which will generate 33% of the companies revenues. Rubicon trades at a multiple of 14 with a 29% growth rate.

Fossil (NASDAQ:FOSL), Urban Outfitters (NASDAQ:URBN), Coach (COH), Macy's (NYSE:M)

Lately retailers Urban Outfitters (URBN), Coach (COH) and Macy's (M) reporting their quarters have been talking about increasing sales in fashion accessories. Fossil (FOSL) sells watches, which are not just utilitarian objects anymore but are worn to create a fashion statement. The company reported a "mammoth" upside surprise, beating estimates by 24 cents. Sales were up 31% for the year.

The company has been successful because of its ability to charge more money for its high-quality products. Fossil is building new stores; "I think we are in on the early innings in this story." Even though the stock is up 32% for the year, it has a multiple of 13 with a 17% growth rate.

Jonah Shacknai, CEO Medicis (MRX) with Allergan (NYSE:AGN)

Even in an uncertain economic climate, people are still paying for face lifts and tummy tucks. Allergan (AGN) and Medicis (MRX) are the two main players in the industry. Medicis makes Solodyne, the top acne-destroying oral antibiotic whose sales have grown 32% in the past quarter. Medicis also produces dermal fillers to smooth wrinkles, and Liposonix, a non-intrusive fat reduction treatment.

Dysport, the main rival of Allergan's Botox, is the greatest grower for Medicis. The successful promotion that gives a $75 rebate on Dysport and the choice to switch to Botox for the second treatment has seen only a 2.5% switchover to the competition. Since launching the Dysport challenge, Medicis has seen its stock rise 17%, and the company trades at a multiple of 10 with an 8.5% growth rate.

Jonah Shacknai discussed the success of Solodyne "by far the number 1 brand of dermatology product in the U.S.... it may the biggest in the world." The treatment is highly effective at treating acne and doesn't have the side effects of other treatments. Shacknai added that he expects Liposonix to get approval from the FDA.


Jim Cramer was up 31% in 2009. Click here now to sign up for Jim's Action Alerts PLUS and trade alongside him. Special discount for Seeking Alpha users.

Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.