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NEW YORK ( TheStreet) -- The markets need to show more respect for well-run companies, Jim Cramer announced to his Mad Money viewers Thursday. Cramer said what seems overvalued on paper today might surprise you and be in a whole new category tomorrow.
Companies executing well have been a big part of the market's recent move, Cramer continued. Case in point" Costco (COST), a stock that was featured in a negative article the front page of today's Wall Street Journal, only to deliver a strong 8% rise in same-store sales hours later. Costco was not "left in the cold" as the article suggested, it was undervalued and underestimated.
Then there's Kroger (KR), our nation's second-largest grocer, which saw its share rise 7% on the day. Cramer said Kroger continues to innovate on every level, consolidating a fragmented industry, bringing down costs and boosting high-margin private label offerings. Bubble? No, value.
In the biotech space, Cramer highlighted Pharmacyclics (PCYC), which popped 10% on a takeover bid from Abbvie (ABBV), a stock which Cramer owns for his charitable trust, Action Alerts PLUS. Pharmacyclics seemed like a bubble yesterday, up 88% so far this year, but today a smart company swooped in and took it to a whole new level. Could other Cramer faves like Isis Pharmaceuticals (ISIS), Receptos (RCPT) or BioMarin (BMRN) be next?All over the markets, companies are making smart decisions, Cramer said, like NXP Semiconductor (NXPI) making a stellar acquisition where one plus one really does equal three, or maybe even four. Great execution can also be seen in the restaurant space. For years, Darden Restaurants (DRI) was poorly run and its stock suffered. But today, Darden is well run and its stock it on the move.
Get DefensiveIt's a great time to be a defense contractor, Cramer told viewers. Just look at the results of stocks like Boeing (BA), up 33%, Lockheed Martin (LMT), up 20%, and Action Alerts PLUS holding, United Technologies (UTX), up 24%, since the markets' Ebola-induced lows in mid-October. But while the markets clear like the big boys, Cramer said he's focused on a small, newly minted defense name, Orbital ATK (OA - Get Report), the combination of Orbital Sciences and ATK Systems, which closed just last month. Cramer said the new company is still small, valued at $4 billion, but deserves to go much high. Orbital ATK now has its hands in everything from ammunition to advanced space and flight system technology. The new company will derive 26% of its revenue from space systems, which includes some 95 satellites currently in production and 800 already in orbit; and 42% from defense, such as small and medium caliber ammunition. Shares of Orbital ATK currently trade at just 13 times forward earnings, a steal compared to its peers, which average 17 to 18 times earnings. Orbital ATK also sports a modest 1.9% dividend yield, but has the possibility for a dividend boost and stock buyback program once the new company gets settled. Must Read: Credit Suisse: 8 Must-Own Consumer Stocks for Your Portfolio
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