Revenues Are Key
In the "Executive Decision" segment, Cramer spoke with Marc Benioff, chairman and CEO of Salesforce.com (CRM), a high-flying stock that delivered a three- cent-a-share earnings beat on a 36% rise in revenues. Shares of Salesforce were sharply lower in after-hours trading, as some of Salesforce's metrics didn't meet expectations.
Benioff touted the quarter as "fantastic," saying that Salesforce just issued 2013 guidance that will put the company at $3 billion in revenues. He said that Salesforce remains the heart and soul of many companies information management systems and there's been tremendous uptake in their latest mobile and social initiatives.
Benioff also explained that Salesforce is still in a growth mode and is focused on revenues and market share, not necessarily earnings. He said that the company's revenue guidance, such as $3 billion by 2013, is the best way to measure the company's success. Benioff clarified that there is no bookings shortfall, something that troubled analysts on the company's conference call.Cramer said that Salesforce is a fabulous growth company, but noted that investor need to balance the growth vs. earnings equation themselves.
Overseas EdgeContinuing with his "Stock Supermarket" series comparing the valuations of similar companies, Cramer looked into Starbucks (SBUX) vs. Dunkin Brands (DNKN) to see which coffee purveyor should be filling up investors' portfolios. On the surface, it would appear that Starbucks is the more expensive stock, trading at 24 times earnings vs. 22 times earnings for Dunkin. However, using the PEG Ratio, a company's multiple divided by its growth rate, investors see a different story. Starbucks is growing at 18%, which gives it a PEG Ratio of 1.3, while Dunkin is growing at 15%, giving it a PEG Ratio of 1.4. Given that the companies are almost even, Cramer said that makes Starbucks the cheaper play, as you're getting a better company for roughly the same price. Dunkin grew same-store sales by only 5.6% in its most recent quarter, but Starbucks was able to deliver 9% growth during the same period. Cramer said that Starbucks real strength is in its international growth, where the company has 6,000 locations, 500 of which are in China. The Chinese store count is expected to grow to 1,500 locations, giving Starbucks the clear edge over Dunkin, which is mainly focus on U.S. growth. Cramer said he predicted that Dunkin shares would languish after its IPO, and they have. He cited insider selling as another reason why investors should drop Dunkin and pick up some Starbucks instead.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV