This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cramer's 'Mad Money' Recap: Toxic Bond Auctions (Final)

Revenues Are Key

In the "Executive Decision" segment, Cramer spoke with Marc Benioff, chairman and CEO of (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 Edge

Continuing 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.

2 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs