Cramer's Mad Money - I Don't Know What Cisco Is Doing (3/15/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 15.

Citigroup (NYSE:C), Bank of America (NYSE:BAC), Home Depot (NYSE:HD), Tractor Supply (NASDAQ:TSCO), Chipotle Mexican Grill (NYSE:CMG), Panera (NASDAQ:PNRA), Cummins (NYSE:CMI), Caterpillar (NYSE:CAT), Apple (NASDAQ:AAPL), Cisco (NASDAQ:CSCO), Nike (NYSE:NKE), Capital One Financial (NYSE:COF)

The stock market is snapping back, and has has been up for 7 days straight; that hasn't happened in 2 years. The transports have finally recovered, some bouncing back to 52 week highs. Rail executives said there is enough production in other sectors, among them autos, to offset the bearishness in coal. Those who bet against Bank of America (BAC) and put huge wagers on Citigroup (C) ahead of the stress test results made the wrong call, since BAC rose on news it doesn't need to raise capital. Citigroup's stock fell, but recovered later. Gasoline prices are not deterring the consumer from spending, and business at Lowe's (NYSE:LOW), Home Depot (HD), Tractor Supply (TSCO), Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) is off the charts. While China seems to be slowing, Cummins (CMI) rallied to a 52 week high and Caterpillar (CAT) finished up. Apple (AAPL) saw a dip, and Cramer would ignore the bearish chatter that the stock is too high.

Cramer took some calls:

Cisco (CSCO) is not clear about how it is spending money; "I don't know what they are doing," said Cramer.

Nike (NKE) is benefiting from both secular and cyclical trends; "It is one of the best stocks on my radar screen."

Capital One Financial (COF) is going much higher. American Express (NYSE:AXP) is also good.

Express Scripts (NASDAQ:ESRX), Cerner (NASDAQ:CERN)

Cramer got behind Express Scripts (ESRX) in 2009, and since then, it has seen a 124% gain. However, its competitor Cerner (CERN) rose 319% since 2009 and 26% in the last 3 months, while ESRX has dropped 4%. Cramer thinks he should have gotten behind CERN instead of ESRX, since the former is clearly the better company. It has superior technology and fewer problems than ESRX, which has trouble integrating some of its acquisitions. CERN has 13% of the hospital market for its medical software, while ESRX has just 4% of the market. A full 52% of hospitals in the U.S. use at least one Cerner application. CERN has terrific visibility, and can predict 74% of its earnings a year ahead and 94% of its earnings ahead of the quarter. CERN's bookings were up 44% for the fifth straight quarter, and while ESRX's bookings rose 26%, it was less than The Street expected. Cerner trades at a multiple of 28 with a 28% growth rate, while ESRX has the same growth rate and seems cheaper with a multiple of 14. However, Cerner is clearly the better company, and Cramer thinks it is worth paying a premium for it.

National Oilwell Varco (NYSE:NOV), Enbridge (NYSE:ENB), CSX (NYSE:CSX)

National Oilwell Varco (NOV) is the leading maker of oil rigs; 92% of the world's rigs have a NOV device in them. With elevated oil here to stay and the bull market in offshore drilling, NOV is a stock to watch. The company has unparalleled technology and operates 4 technical colleges which train its technicians. NOV will continue to take market share and trades at a 12 multiple with a 19% growth rate.

Cramer took some calls:

Enbridge (ENB) is a growth company that is not overvalued; investors should look at its terrific cash flow.

CSX (CSX) will keep heading back up now that the growth in housing construction should offset concerns about coal.

Tale of Two IPOs: Demandware (NYSE:DWRE), Allison Transmission (NYSE:ALSN), (NYSE:CRM)

Two IPOs fell on the same day: Demandware (DWRE) and Allison Transmission (ALSN). Cramer usually recommends getting in on the deal of hot IPOs and selling on a spike. However, sometimes an IPO is not so hyped up and may be a long-term investment. Allison Transmission only had a modest gain and should benefit from the auto buildout. While Cramer thinks Demandware is a " (CRM) Junior," it rose from its opening price at $16 to $25 and settled at $23. Cramer would take profits on DWRE, because it has gotten too expensive and would hold on to ALSN.


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