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Pitney Bowes Won't Die Quietly

Editor's note: Jim Cramer told viewers of his "Mad Money" TV show on Tuesday that Intuitive Surgical (ISRG) and Potash (POT) are two ugly ducklings set to become beautiful swans. Here's another stock with those same characteristics.

Winter Flop, Summer Flip
PBI Chart PBI data by YCharts

NEW YORK ( TheStreet) -- Commensurate to falling mercury in Wisconsin during last winter's grievously bitter cold season, Pitney Bowes (PBI - Get Report) sank to new 52-week lows at the start of 2013.

The seasons change. Along with the higher temperatures Pitney Bowes has sprung into summer, increasing over 40% off the winter lows.

The outlook for the printed stamp company has improved, even if revenue remains under pressure. The management team at Pitney has performed exceptionally under the pressure. Through cutting costs (including lots of pink slips) and net margin control, the company adapted quickly as the ground shifted under its feet.

PBI Revenue Quarterly Chart PBI Revenue Quarterly data by YCharts

I wish I could say the same for the U.S. Postal Service with the endless congressional micro-managing that prevents needed market-adapting changes. Perhaps Pitney Bowes, FedEx (FDX), United Parcel Service (UPS) and the USPS best illustrate the differences between private enterprise and government bureaucratic monopolies as well as anything. Only one is controlled by Congress and has a monopoly, and only one is losing money.

You can decide on the merits, but for now I will focus on Pitney. First-class mail volume declined over 30% since 2000, and the rate of decline accelerated into 2012. Have we witnessed the bottom? Maybe, but Pitney isn't sitting around crossing their fingers hoping so.

Pitney is charging ahead, morphing from a postal stamp printing company into an information management solutions company. Divesting from business operations that don't fit well with the overall vision isn't an easy task but after selling various European divisions, Pitney's management demonstrates it is willing to make the tough choices.

PBI Operating Margin Quarterly Chart PBI Operating Margin Quarterly data by YCharts

The above chart illustrates why the market is pricing Pitney 45% higher today than at the start of the year. Based on the stratospheric short interest level, many on Wall Street declared Pitney a dead stock walking. More than one out of every share in the float is shorted.
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