Mad Money Recap
Cramer's 'Mad Money' Recap: Buy Coke's Regeneration
TheStreet.com Staff
05/18/07 - 07:40 PM EDT
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Jim Cramer capped off a weeklong series of "Transformational CEOs" Friday by naming Coca-Cola's (KO - Cramer's Take - Stockpickr) Neville Isdell as the fifth member of a pantheon of chief executives who are turning around their companies. When Isdell arrived, Coke was in danger of becoming a "has-been" company, Cramer told viewers of his "Mad Money" TV show. The sodamaker generated flat sales because it had "bet the house" on carbonated beverages, where the growth was not present. Coke even had the opportunity to buy Quaker Oats, but it gave it up, passing up on an opportunity to acquire Gatorade, Cramer said. Instead, PepsiCo (PEP - Cramer's Take - Stockpickr) swooped it up. Pepsi was "eclipsing" Coke because of its smart decision to diversify to food and noncarbonated beverages. Coke bottomed soon after Isdell joined, but it has moved up significantly in the last two years. "Its last quarter was a wonder to behold," Cramer said. Although Coke doesn't have any growth in the U.S., it has "serious" international exposure, he added. Plus, it has introduced new products, such as Coke-Zero, which Cramer called a "success story."
Next Week's Game Plan
In the show's "Game Plan" segment, Cramer advised buying GameStop (GME - Cramer's Take - Stockpickr) ahead of when it reports its quarterly earnings on Wednesday, but only if there is weakness in the stock on Monday or Tuesday. Analog Devices (ADI - Cramer's Take - Stockpickr), which is set to report after the market close on Tuesday, is worth getting in ahead of its quarter, he added. Further, Cramer said he likes Target (TGT - Cramer's Take - Stockpickr) and suggested buying the retailer before and after it reports on Wednesday. Also on Wednesday, CA (CA - Cramer's Take - Stockpickr) reports. It could be a really big quarter for CA, and people should get in before the software company reports, he said. Dick's Sporting Goods (DKS - Cramer's Take - Stockpickr), which reports Wednesday, is OK, said Cramer, but what he's really interested in seeing is how Under Armour (UA - Cramer's Take - Stockpickr) and Nike (NKE - Cramer's Take - Stockpickr) merchandise is selling at the sporting-goods retailer. Cramer suggested viewers buy Under Armour and Nike, the latter of which he's been buying for his Action Alerts PLUS charitable trust, ahead of Dick's quarter.Auto-Repair Play
Normally, Cramer told viewers, he doesn't recommend companies that are bankrupt, that trade on the pink sheets or that trade as low as $2 a share. And although he's not going to start recommending these types of stocks today, he wants to call attention to one such name. Delphi (DPHIQ - Cramer's Take - Stockpickr) is a stock that has all the three qualities Cramer said he usually shies away from. It is a "big, bankrupt auto-parts maker," he said. Even though Cramer said he typically doesn't go for these kinds of stocks, "this company may have something big going." He said he's not advising people to necessarily take the risk and buy Delphi, but at the same time he can't ignore the potential upside with the former GM subsidiary. Delphi, Cramer said, has two chances to be saved from bankruptcy. First, Delphi entered into an equity investment deal led by Cerberus Capital Management and Appaloosa Management, he said. This transaction could pay $3.4 billion to support Delphi's exit from bankruptcy. If this is legit and works out, Delphi could give its shareholders a double, Cramer said, as it could value Delphi twice as much as its valued now. There's another proposal on the table from Highland Capital Management that values its shares even higher. But Cramer said he's only considering the more conservative deal. "If you go buy Delphi, you are betting the United Auto Workers could recognize that the old operating structure, the one that took Delphi to bankruptcy, is not going to work," he said.
However, Delphi is a stock Cramer said he wouldn't recommend buying unless people fully recognize that they're taking their financial lives into their own hands. He wouldn't buy it himself, he said. It is a two-down and five-up story, "but the two down could come first," Cramer said.
Owning Delphi is risky, so while he can't advise buying it, Cramer is drawing attention to the upside potential and letting others make their own decision on this one.
Mad Mail
During the show's "Mad Mail" segment, in which Cramer responds to vieweer mail, Cramer said gold stocks tend not to trade on earnings if the commodity is plummeting. However, he still believes people should have a gold stock in their portfolios, and he likes Yamana Gold (AUY - Cramer's Take - Stockpickr). Cramer told another viewer that he feels "like an idiot" for having been bearish on Bare Escentuals (BARE - Cramer's Take - Stockpickr). Although he anticipates there will be insider selling on this one, he told viewers not to be intimidated. BARE is a buy, he said. In response to another viewer letter, Cramer recommended that market players stay away from Krispy Kreme Doughnuts (KKD - Cramer's Take - Stockpickr).Lightning Round
Cramer was bullish on Bucyrus International (BUCY - Cramer's Take - Stockpickr), Gilead Sciences (GILD - Cramer's Take - Stockpickr), Celgene (CELG - Cramer's Take - Stockpickr), Fuel-Tech (FTEK - Cramer's Take - Stockpickr), Texas Instruments (TXN - Cramer's Take - Stockpickr), Qualcomm (QCOM - Cramer's Take - Stockpickr), Textron (TXT - Cramer's Take - Stockpickr), L-3 Communications (LLL - Cramer's Take - Stockpickr), Lockheed Martin (LMT - Cramer's Take - Stockpickr), Raytheon (RTN - Cramer's Take - Stockpickr), Halliburton (HAL - Cramer's Take - Stockpickr), Molson Coors Brewing (TAP - Cramer's Take - Stockpickr), Coca-Cola (KO - Cramer's Take - Stockpickr), PepsiCo (PEP - Cramer's Take - Stockpickr), Edison International (EIX - Cramer's Take - Stockpickr), McDonald's (MCD - Cramer's Take - Stockpickr) and Disney (DIS - Cramer's Take - Stockpickr).Want more Cramer? Check out Jim's rules and commandments for investing from his popular book by clicking here.