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Cramer's 'Mad Money Recap': Yum! Brands' Delicious Global Business

TheStreet.com Staff

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Despite skyrocketing food costs, Yum! Brands(YUM Quote) recently turned in an incredible quarter and is now trading at close to its 52-week high, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Cramer welcomed David Novak, president and CEO of Yum!, to the show to find out more about the company's run of success.

Yum!, whose brands include Kentucky Fried Chicken, Pizza Hut and Taco Bell, beat earnings estimates in the past quarter by 2 cents a share and the stock is up 65% since Cramer first recommended it on Oct. 11, 2005. Cramer called Yum! an incredibly well run international growth story.

Novak said Yum!'s business is booming in China and around the globe, with expectations for another great year.

Asked about China in particular, Novak said he expects his company's 3,000 store footprint in China to far exceed the 18,000 stores it has in the U.S.

He also said that Yum has overcome China's high inflation by increasing its sales and opening more new stores.

Novak said that he is very pleased with Yum!'s strong portfolio of brands and its international exposure, noting the company is able to weather just about any storm and still deliver consistent results.

When asked about Yum's domestic business, Novak said that the company is transforming its menus to strengthen all of its brands. Pizza Hut, for example, will be expanding to offer pasta while KFC will be offering grilled chicken. Novak said the changes will unlock the value of the company's brands.

Cramer told viewers that they need to "get with the program" and invest in this booming international story. "I want to be in Yum!" he declared.

America's New Technology

Cramer declared that America is once again the greatest manufacturing nation. He cited both superior engineering and the weak dollar as the catalysts driving the country's new economy.

Cramer cited Parker Hannifin (PH Quote) as one of America's new manufacturing companies. He said the company is on the cutting edge of industrial technology in such areas as electrical engineering products and motion and control systems for commercial trucks and aerospace.

Cramer welcomed Don Washkewicz, chairman, president and CEO of Parker Hannifin, to discuss his company's bright outlook.

Washkewicz said that his company has just completed a seven-year transformation from a largely domestic company into a company that now derives 55% of its sales overseas.

"North America is in recession, but Parker Hannifin is not," said Washkewicz. And while he admits having felt the downfall of the U.S. economy, Washkewicz feels that it will only be a matter of time until that economy starts to recover.

In the meantime, he said, "you have to be in every region around the world."

Cramer called Parker Hannifin one of the greatest manufacturing companies in the world. Of the sixteen analysts covering the company, he noted that only four rate it a buy, while 12 have it as a hold. "Those people are morons," said Cramer.

The ConAgra Conundrum

In light of the surprise bid for Wrigley (WWY Quote), Cramer discussed why his recommendation of ConAgra (CAG Quote) hasn't been working.

Cramer first recommended ConAgra on Oct. 26, 2005, and then again on March 28, 2006. Those calls are down 10% and 6% respectively.

"Why hasn't this worked?" he asked. ConAgra, he explained, is a great food company, with 27 different brands that are either No. 1 or No. 2 in their categories. Cramer expected the company to increase profits through cost savings, but instead, higher raw food costs have derailed that plan.

Cramer welcomed Gary Rodkin, president and CEO of ConAgra, to explain what's happening. Rodkin expressed his confidence in his company's business model and its strong brand portfolio.

He defended the sale of the commodity food business, saying it will help transform ConAgra into a more lucrative packaged food company.

Rodkin explained that a combination of strong global demand, a weak dollar sparking exports, and the U.S.'s current energy policy that promotes increased ethanol production are all contributing to the company's higher food costs.''

However, Rodkin feels selling the commodity side of their business will make ConAgra a better business that's more focused on what matters.

Cramer reserved judgment on ConAgra. He told investors if they believe raw costs will continue to rise, they should choose to stay away from ConAgra, but if not, the company's great brands are selling for way too little.

Lightning Round

In the Lightning Round, Cramer was bullish on Diageo (DEO Quote), Schering-Plough (SGP Quote), Ford Motor (F Quote), AT&T (T Quote), Verizon (VZ Quote), Atlas Energy Resources (ATN Quote) and Yamana Gold (AUY Quote).

Cramer was bearish on LSI Logic (LSI Quote), Lifecell (LIFC Quote) and Citizens Communications (CZN Quote).

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

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