Cramer's Mad Money - Putting The Brake On Pep Boys (6/14/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday June 14.

Pep Boys (NYSE:PBY), AutoZone (NYSE:AZO), O'Reilly Motors (NASDAQ:ORLY)

Auto parts retailers have been doing well, with AutoZone (AZO) close to it 52 week high and O'Reilly Motors (ORLY) seeing gains. One stock in the sector has been justly left behind: Pep Boys (PBY). The company declined when a buyout offer was scrapped because of deterioration in PBY's business; the stock is down 14% for the year, and Autozone has jumped 33%. One problem is the combination of the service with auto parts. Since most of PBY's locations are in white collar areas, one part of the business, service, does moderately well, while auto parts, which usually fare better in blue collar areas, are not selling. In addition, since PBY sells auto parts to service garages, it is essentially trying to do business with competitors. With such a flawed business model, nothing is going right for PBY, and Cramer put the stock on the Sell Block.

CEO Interview: Greg Ebel, Spectra Energy (NYSE:SE)

With natural gas rising on Thursday by 15%, it might be time to look at a natural gas play. Spectra Energy owns pipelines for natural gas, yields 4% and has significant assets. With the EPA turning against coal, natural gas might be an alternative, since it is cleaner than coal and cheap. CEO Greg Ebel discussed a major pipeline that is going to be completed in 2014 and will create 5,000 jobs. Spectra is developing ways to ship natural gas overseas via Canada. Cramer thinks Spectra Energy is a good stock for a diversified portfolio.

Mad Mail: Ellie Mae (NYSEMKT:ELLI), Best Buy (NYSE:BBY), Garmin (NASDAQ:GRMN), Harman (NYSE:HAR), Carnival (NYSE:CCL), InterOil (NYSE:IOC), Apple (NASDAQ:AAPL), ConocoPhillips (NYSE:COP)

Ellie Mae (ELLI) has had a terrific run since it came public last year, and has rallied 170%. ELLI is still a buy, but since it has a market cap of only $350 million, it should be considered a speculative stock, and limit orders should be used. The company has strong secular growth, limited competition and is based in the U.S. ELLI trades at a multiple of 26 but has a 32% growth rate.

Best Buy (BBY) was upgraded after its Chairman resigned, and Cramer thinks the upgrade was a mistake.

Garmin (GRMN) is a stock that has seemed solid, but Cramer is worried about it, because a similar stock, Harman (HAR) didn't move even after the CEO explained it wouldn't face competition from Apple (AAPL).

Carnival (CCL) is a stock Cramer would buy half a position in now and half on Monday. It has a good dividend, solid management and the company is well-run.

InterOil (IOC) has always been a wild trader, and tends to move up and down on hype. Cramer prefers a more conservative oil play, like ConocoPhillips (COP).


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