Hang Up on Garmin
In the Thursday "Sell Block" segment, Cramer took aim at personal navigation giant
, a stock who's business, he said, is on life support.
Cramer said Garmin may be the first casualty of the Mobile Internet Tsunami, as more and more consumers are opting for built-in navigation on their smart phones, rather than stand-alone devices.
Back in 2005, Garmin's stock exploded, as personal navigation devices for cars became all the rage. After impressive growth between 52% and 62% a year, personal navigation devices now account for a whopping 73% of Garmin's overall business.
But Cramer said stand-alone navigation has now run its course, and Garmin's future earnings power have been critically wounded. Remember the Palm Pilot? Cramer said personal digital assistants were also once all the rage, but newer technology has simply made them obsolete.
Cramer said Garmin's once proprietary technology has now become a commodity, with cell-phone maker
announcing that it'll include free navigation on all its smart phones. "Why pay extra?" asked Cramer.
By removing personal navigation from Garmin's business model, Cramer estimated Garmin's true value to be around $26 a share, a full 20% lower than where it trades today. He said the company's long term story is simply unacceptable, and investors need to sell, sell, sell.
Cramer turned the spotlight on pest control giant
as the next stock in his series of outstanding companies raising their dividends in a weak market.
Investors may know Rollins as Orkin, a brand that commands 20% market share in the U.S. pest control market. Rollins boosted its dividend 28% last week, from 7 cents a share to 9 cents, and currently yields 1.8%.
Cramer said Rollins is like an ATM machine that generates cash, with 40% of its business in commercial pest control, 40% in residential and the remaining 20% focuses on termite control. The company's recent acquisition gives it new relationships with home builders, allowing it to get in on the ground floor with home owners.
Cramer said there's a lot to like at Rollins. The company is improving customer retention and sales rates, and is expanding overseas with 14 franchises so far. Rollins trades at just one point off its 52-week high, so Cramer suggested waiting for a pullback before jumping in. He said Rollins is definitely a stock worth looking into.