Mad Money Recap

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Cramer's 'Mad Money' Recap: Bullish on Billboards

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

Billboards are making a comeback, said Jim Cramer on "Mad Money" Tuesday, and he wants viewers to buy Lamar Advertising (LAMR).

Lamar has ad space on billboards, buses, bus shelters and benches -- all places you can't miss, Cramer noted. Because of the increase in the use of digital video recorders such as TiVo (TIVO), advertisers are moving away from TV advertising. Other forms of advertising, such as the Internet and billboards, are gaining share.

"You can't TiVo a billboard," he said.

Lamar is adding digital billboards, which allow it to show multiple ads on one space and should increase sales. And Nielson is coming out with a rating system for billboard advertising, Cramer said, which should make advertisers more comfortable as the can quantify the effectiveness of their ads.

In response to a question about fellow advertiser Clear Channel Outdoor (CCO), which went public last month, Cramer said the IPO pricing was disappointing, and he would avoid the stock. He would look to buy the shares around $16 or $17. Clear Channel Outdoor closed Tuesday at $18.87.

Commenting on Yahoo! (YHOO) and Google (GOOG), Cramer said both companies are seeing unwavering secular growth in advertising.

Marching Toward Marchex

Cramer is bullish on Marchex (MCHX) as a play on local Internet search. Marchex helps draw traffic to local businesses' Web sites by helping their ads appear at the top of search results. It also owns Web properties, including 98% of all U.S. zip codes with a dot-com or dot-net suffix.

Cramer is also a fan of Marchex's CEO, Russell Horowitz, who Cramer said is one of the early pioneers of the Internet.

Marchex' stock is expensive, trading at 10 times sales. But Cramer noted that TheStreet.com Internet Review author James Altucher believes Marchex could have triple-digit earnings growth in the next several years.

Cramer has been waiting for a decline in Marchex to recommend the stock, but said that "isn't happening." He would buy half a position now and purchase more later if the stock does pull back.

Marchex "may very well be in the class of Google," Cramer said.

In response to a question about aQuantive (AQNT), Cramer said the stock has gotten too high and Marchex is a better value.

Taking a Shine to Solar Stocks

Cramer has spied a trade on an event no one is talking about, he said. The California Public Utility Commission is set to vote on an initiative that would give 10-year incentives for the home installation of solar panels.

If the plan passes, it will be big for Evergreen Solar (ESLR) and SunPower (SPWR), Cramer said.

The outcome of the vote is anything but certain. But Cramer noted that even if the plan is rejected, Evergreen Solar and SunPower might not go down much because no one seems to be paying much attention to the issue. And both are interesting speculative investments, he said, although you should decide beforehand whether you're buying as an investment or a trade.

Solar power is expected to grow at 30% a year for the next five years. But solar needs big government subsidies to be cost effective, and right now, subsidies are mostly being given Europe, Cramer said. If Europe decides to stop subsidizing, it will be bad news for Evergreen and SunPower.

Of the two companies, Cramer said SunPower has better-looking and more efficient solar panels. Evergreen Solar, though, has a seven-year supply of silicon at guaranteed prices, he said, so it isn't at risk of not being able to acquire the silicon it needs.

PMC-Sierra Sees Growth

PMC-Sierra (PMCS) CEO Bob Bailey joined Cramer by telephone to discuss the strategy behind his company's acquisition of Agilent Technologies' (A) storage semiconductor business.

Bailey said there is a "digital consumer revolution" being driven by iPods, TiVos and high-definition televisions that require a "second generation of broadband infrastructure" to make them work well. PMC-Sierra now derives about 50% of its business from telecom and 50% from enterprise storage, he said.

Cramer asked about PMC-Sierra's legacy business, which, according to one analyst, is not doing well.

Bailey said "things have been getting better from a profitability point of view" over the last four or five quarters.

Cramer asked if PMC-Sierra has created too much assurance. "Would you like to ... just temper the assurances a little bit so that people don't raise expectations?" he asked.

"We have a fabless business model which has a lot of ... financial leverage in that for every dollar of revenue we get, 80% drops to the bottom line," Bailey said.

He added that telecommunications carriers are increasing capital expenditure forecasts for 2006 and consumer gadgets are "devouring bandwidth" and need connectivity. Additionally, "the acquisition that we just did is going to be accretive to our earnings," he said. "We feel very good right now."

Cramer summed up the interview by saying he would like to see one quarter's results with the Agilent acquisition before he embraces the stock. "I've been disappointed in the past," he said.

To view Cramer's interview with Bailey, click here.

Lightning Round

Bullish

Cramer was bullish on Hudson City Bancorp (HCBK), Commerce Bancorp (CBH), Abercrombie & Fitch (ANF), Ameritrade (AMTD), Allscripts Healthcare (MDRX), IntraLase (ILSE), Syneron Medical (ELOS), Salesforce.com (CRM), Johnson Controls (JCI), Sears Holdings (SHLD), SiRF Technology Holdings (SIRF), Brown & Brown (BRO), New York Community Bancorp (NYB), Marsh & McLennan (MMC), Activision (ATVI), Electronic Arts (ERTS), GameStop (GME), Google (GOOG), Barnes Group (B) and Urban Outfitters (URBN).

Bearish

Cramer was bearish on Bebe stores (BEBE), Georgia Gulf (GGC), Krispy Kreme (KKD), Sonus Networks (SONS), I2 Technologies (ITWO), Hewitt Associates (HEW) and The Knot (KNOT).

For more of Cramer's insights during the Lightning Round, click here.