This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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: Rally Made in U.S.A. (Final)

Stocks in this article: BNNY IMAX AVP RHT

Such was the case with Annie's (BNNY), the makers of healthy, organic foods that came public last Wednesday. Cramer said he initially panned the IPO, giving his usual "take the money and run" advice. But after taking some time to analyze the company, Cramer said that Annie's is one of only a few companies actually worth holding for the long run.

Cramer said his initial assessment of Annie's was a "snap judgment," and investors should think of the company as a younger sibling to Hain Celestial (HAIN), the organic food juggernaut. He explained that Hain trades at 25 times earnings with a 13% growth rate, but Annie's is currently trading at just 23 times earnings, despite the fact that it's likely to be growing around 22% if it follows last year's trends.

Cramer said the Annie's IPO, which debuted at just $18 a share, was designed to be too low, so it's initial pop to $31 was justified. But even at its current levels around $34 a share, the stock is still inexpensive if it can maintain its growth targets. He said that Annie's will be the target of the Wall Street promotion machine just as soon as the company's quiet period expires in the middle of next month.

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Richard Gelfond, CEO of big-screen theater purveyor IMAX (IMAX), a company Cramer said may finally be poised for substantial growth.

Gelfond said that IMAX has been growing 30% a year for the past three years and now has a backlog of 250 theaters. He called the company's recent growth "meteoric," noting that IMAX only has 225 theaters in China, a country with enormous growth potential.

When asked about the company's business in more detail, Gelfond noted that IMAX is able to transport moviegoers in a way that traditional theaters just can't; that bodes well in a tough economy or when gasoline prices may prohibit a real-life cross-country vacation. IMAX is now able to easily switch between 2D and 3D movies, and Gelfond noted that a movie doesn't need to be 3D in order to be great "as long as it's IMAX."

IMAX is also becoming a more stable company, said Gelfond. The ups and downs of movie releases are becoming less and less of a factor, he said, as IMAX builds a stronger and stronger network of recurring revenues from its theaters. Gelfond also said that IMAX is committed to its theaters in museums around the world. Those theaters, which use older film technology, are being upgraded to digital, said Gelfond, which will reduce the cost of a $35,000 film release to just $150 for a digital release.

Cramer said that he was a fan of IMAX, especially given the company's growth prospects and the fact that its earnings are no longer dependent on Hollywood's next blockbuster release.

In the second "Executive Decision" segment, Cramer spoke with Jim Whitehurst, president and CEO of Red Hat (RHT), the software maker that saw its shares jump 20% when it reported a surprise 31% increase in its billings. Shares of Red Hat are now up 47% so far this year and 56% since Cramer last spoke with Whitehurst last October.

Whitehurst explained the 20% jump in Red Hat shares by saying that Wall Street analysts continue to underestimate the company's business model. He said that Red Hat has a different business model than other software makers, one that's far superior and more profitable on a cash-flow basis. Wall Street continues to forecast decelerating earnings, noted Whitehurst, yet Red Hat continues to accelerate.

Whitehurst also explained that while his company is hard at work developing new versions of its software, many existing customers continue to depend on older versions for their organizations. He noted that investment banks and trading platforms like those at NYSE Euronext (NYX) are designed to run for "dozens of years" and Red Hat continues to support those systems.

Red Hat is also about new products, said Whitehurst, thanks to its acquisition of Gluster, an audio and video storage platform that helps power Pandora (P) and other media streaming services.

Cramer said while shares of Red Hat are red hot at the moment, someday soon there will be a big down day in the markets, which will create the perfect time to buy in.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • 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