Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Dan Fitzpatrick over the chart of electronics manufacturing outsourcer Flextronics (FLEX).
According to Fitzpatrick, the chart of Flextronics is thing of beauty, with the stock extending gains over its 50-day moving average, after retesting that average five times in the last few months. Given that the stock broke down at $8.60 a share, Fitzpatrick sees shares headed back to those levels before meeting any additional resistance.
Turning to the stock's fundamentals, Cramer said he totally agrees with Fitzpatrick. He said the metric that matters in this business is utilization rate, and at 60% to 70% utilization, Flextronics is ahead of its peers.But Cramer has lots more to love about the company, including its diverse customer base, which means that no single customer can hurt Flextronics too badly. Likewise, the company is also geographically diverse, making it immune to any one country's economy, he said. According to Cramer, Flextronics also has reduced its inventory levels, begun manufacturing some higher-end products with higher margins, and has 21% of its business exposed to the red hot mobile device market. Trading at just 12 times 2011 earnings, Cramer said he is a buyer of Flextronics, which he calls the best house in a sizzling neighborhood.
Martha's Expanding PlateCramer welcomed Charles Koppelman, executive chairman of Martha Stewart Living Omnimedia (MSO), to the show to discuss that company's new partnership with home improvement juggernaut Home Depot (HD), which he also owns for his Action Alerts PLUS portfolio . Koppelman explained that the model at Martha Stewart Living changed several years ago, as the company transitioned from being strictly a publishing empire to one that included merchandising, media, and retail components. He said that the problem on Wall Street has been that retail analysts don't seem to understand publishing, and media analysts don't seem to understand merchandising. Koppelman said that the company is scaling out of its agreement with K-Mart, owned by Sears Holdings (SHLD), and is entering new partnerships with Macy's (M), and now Home Depot. Koppelman said the opportunity exists to develop more products, and better products, at these new outlets. Also on the agenda at Martha Stewart Living are possible food products to be distributed at Costco (COST), as the company finishes up consumer tests at select locations. Koppelman noted that a slight pickup on the publishing side in advertising. He said that his company's four magazines are highly targeted, and loved by consumers, and that helps make them attractive. Cramer said he's still a fan of Martha Stewart Living, and said that he'd be a buyer on a pullback in the stock.
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