This Day On The Street
Continue to site
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

Cramer: The Year of the Deal Marches Forth

Editor's Note: This article was originally published on Real Money on Feb. 14. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

It's the year of the deal. People just don't recognize it. Stocks have done nothing for years. The good ones have done nothing. The bad ones have done nothing. A handful of stocks stole the spotlight, and the rest have been dogs.

That's most certainly the rationale behind the Berkshire-Hathaway (BRK.A - Get Report) deal to buy Heinz (HNZ). Five years ago -- five long hard years ago -- Heinz stock was at $52. Until very recently, no doubt until talks started to occur, it stood at $55. Yet the only thing that had happened to Heinz was that it had gotten better, stronger and more powerful. Gross profit, $3.5 billion back then, was on pace to reach $4.3 billion this year. $2.60 per-share earnings then, now $3.53.Can you imagine that much more gross profit, and that kind of EPS increase, yet the stock rallied just 3 points in five years?

It is absurd. It was only after the recent market run and the talk of so many takeovers out there that good things started happening to the stock.

I have always loved and pushed Heinz stock on everyone and anyone. It was the first stock I ever bought for my hedge fund. It was the first stock I ever sold as a broker at Goldman Sachs. I did it because my former partner, Jack Shepherd, made this point: No matter what you do, no matter where you are and no matter what happens, you will not see a bottle of Japanese or Chinese ketchup on the table. It will always be Heinz. I guess Warren Buffett knows that, too.

Today's second deal comes under the total-outrage have-to-buy category -- the U.S Airways (LCC)-AMR combination. This one really rankles, because all of the planes we fly are always full. The prices are almost never cheap. Now they are going to go up big, and the U.S. Justice Department can't do a thing because it doesn't want an AMR to liquidate.

The combination is so powerful, and the airlines now so few, and the barriers to entry so great that it makes a tremendous amount of sense to buy the combination. The Southwest Air (LUV) and United Continental (UAL) area, as well -- all are buys.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs