Cramer's Mad Money - Yahoo Is Back (10/1/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday October 1.

Yahoo (YHOO) Is Back. Other stocks mentioned: Google (NASDAQ:GOOG), AOL (NYSE:AOL), Fortinet (NASDAQ:FTNT)

Cramer congratulated CEO Marissa Mayer for turning around Yahoo (YHOO). While the stock has hardly budged for 3 years, it is clear that Mayer is bringing her expertise gained at Google (GOOG) to create value for Yahoo. The company’s parts are worth more than the whole, and the key to Yahoo’s recovery is to sell some of its assets, as it is planning to do with Yahoo Japan, of which it holds a 35% stake. Mayer has stated a commitment to return the benefits to shareholders, and a potential buyback could sink 19% of the float.

Cramer took some calls:

AOL (AOL) has run up, but Cramer thinks CEO Tim Armstrong is one of the most underrated CEOs. Cramer thinks AOL can go higher.

Fortinet (FTNT) didn’t make the numbers, but the company is in a strong sector and is well-managed.

A Good Idea For This Earnings Season: Union Pacific (NYSE:UNP). Other stocks mentioned: FedEx (NYSE:FDX), Home Depot (NYSE:HD), Norfolk Southern (NYSE:NSC), CSX (NYSE:CSX), Leggett & Platt (NYSE:LEG), Ferrellgas (NYSE:FGP)

With stocks rallying, it is hard to find good names that haven’t already risen significantly, like Home Depot (HD), up 14%, or whose stories are not well known. The dogs of the Dow seem too doggish, and the S&P 500 winners are way too high. Instead of looking at the averages for top and bottom performers, Cramer decided to consider laggard sectors, like transport. He has long shied away from recommending airlines, trucking hasn't been faring so well after a bad number from FedEx (FDX), so that leaves the rails. Norfolk Southern (NSC) gave a poor pre-announcement, CSX (CSX) is too levered to coal, so the alternative is Union Pacific (UNP), which transports coal, but the cheapest variety, and has significant exposure to domestic oil shales. Cramer would buy UNP on a decline, and expects it to rise 6 points.

Leggett & Platt (LEG) has been a great performer and is a well-run company.

Ferrellgas (FGP) was a stock Cramer recommended when he liked propane, but for some time now, he has been bearish on all propane stocks because of the intensity of the competitiveness.

CEO Interview: Hamid Moghadam, Prologis (NYSE:PLD)

Prologis (PLD) is a REIT that has run, but has recently seen a pullback. The company has exposure to 21 countries and is doing well overseas. CEO Hamid Moghadam says this is a recent development and bodes well for the world economy. The REIT is taking on substantial construction projects and sees “real opportunities going forward.” Cramer thinks that Prologis’s success means that the macro situation might not be as bad as it seems.


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