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Jim Cramer came out on his "Mad Money" TV show Friday with guns blazing for Wall Street naysayers in the stock of
. Cramer said the maker of point-of-sale touch-screen systems for movie theaters, restaurants and retailers is being held down by investors who "don't understand where it fits in the scheme of things."
Naysayers of Radiant point to a slowdown in movie attendance and a slowing economy, which they believe is hurting retail and dining out, said Cramer. But they are missing the point in that Radiant Systems is a play on increased productivity, which is always in demand, he said.
Cramer said Radiant recently raised guidance and has big growth potential. Its stock was up more than 6% Friday on news it had signed a deal with Citgo, and Cramer said it would have been foolish to wait any longer to recommend the stock because there is "too much chance good news could strike at any moment."
Those who are afraid to own Radiant just "don't get it," he said.
All the Extras
With the complicated new Medicare prescription drug plan taking effect, Cramer is bullish on pharmacy benefits manager
because "the more confusing things get for patients, the more demand there is for a benefit manager like HealthExtras to come in as a consultant and simplify the process for seniors."
Cramer likes HealthExtras over larger rivals such as
Medco Health Solutions
for its growth. Revenue is up 300% since 2002 and 27% in the last 12 months, said Cramer. Net income is up 32% in the last 12 months, and margins, which are "stronger than the rest of the industry," are increasing. Cramer said Wall Street expects 35% earnings growth for 2006, but he believes EPS growth will eclipse that rate.
Finally, with a market cap of about $785 million, HealthExtras is "in the sweet spot" to be acquired, and there is plenty of room for consolidation in the pharmacy benefits management industry, said Cramer.
Cramer believes HealthExtras is headed to $30. The stock closed at $19.87 Friday.
For All the Coffee in China
CEO Howard Schultz joined Cramer via satellite. Cramer asked Schultz about Starbucks' venture into music.
Schultz said in a short period of time Starbucks has "changed the rules of engagement for the music industry." Starbucks will continue to leverage its brand to offer "other forms of entertainment," he said.
Cramer asked Schultz about his company's expansion into China, where it currently has about 200 stores.
Schultz said China is the "single largest opportunity that our company has in terms of geography ... We are stunned at the relevancy of the Starbucks experience."
"We're capturing the imagination of the Chinese young people because of the environment, the setting, the experience, and Starbucks really is becoming the third place in China after home and work," he said.
"You said thousands of stores," said Cramer. "Is it possible that China will be bigger for Starbucks one day than America?"
"I would never have the arrogance to say something like that," said Schultz. "I can only say that there's no reason why we can't have many, many stores in China... There's never been a runway of an opportunity like this that we've had before, and the initial results ...
give us great opportunity."
Cramer ended the interview saying "I wish I owned this stock for my charitable trust, (
ActionAlertsPLUS). This one is a 'mon backer.* ... It's the ultimate China play."
(To view Cramer's interview with Schultz, please click here.)
Credit Where Credit Is Due
Thursday's show, Cramer commented on stocks that had high short interests such as
Accredited Home Lenders
, about which Cramer said he is not a fan of the company's nonconforming loan business. James Konrath, the company's CEO, joined Cramer by telephone Friday to give his point of view.
"Why is the short position so big if it isn't a bad company?" asked Cramer.
Konrath said most publicly traded non-prime mortgage lenders are REITs. Accredited Home Lenders is not. "Because of the decline in some of the REITs' stock prices, some ... are paying a dividend of 20% or more. Investors who either want to short the space or want to be long one of those dividend-paying REITs but don't want to be long the industry are shorting LEND because we do not pay a dividend."
"So, they think it's like a risk-free short?" asked Cramer.
Yes, said Konrath, but he added LEND has the lowest origination costs and some of the highest gains on the loans it sells "giving us the highest profit margin of any publicly reporting company."
He added LEND is able to price its asset-backed securitizations at the highest levels "because we've had some long-term superior performance on our mortgage-backed securities."
Konrath also said LEND has an "unbroken record of meeting or exceeding our quarterly or annual EPS guidance since the company went public in February '03."
Cramer summed up the interview saying he was not aware of LEND's excellent track record and added that the company had been in business for 10 years, but had only been public for two years. Had Cramer known, and with LEND trading at just four to five times earnings, he would have given the stock a 'mon back, he said. "This one is a true 'get shorty.' Go get 'em!"
(To view Cramer's interview with Konrath, please click here.)
Cramer was bullish on
Black & Decker
Ruth's Chris Steak House
American Science & Engineering
Capital One Financial
Cramer was bearish on
Leggett & Platt
Applied Micro Circuits
Fidelity National Financial
j2 Global Communications
For more of Cramer's insights during the Lightning Round,
*For all you home-gamers, a 'mon-back opportunity means Cramer would back up the figurative truck and load up on a stock.
Interested in more Cramer? Check out Jim's rules and commandments for investing from his latest book by
. It's a series of articles from Cramer on how to become a better investor. The following table lists some of the rules that Cramer dissects.
At the time of publication, Cramer was long Intel, Motorola, PPG Industries, Qualcomm and UnitedHealth Group.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on Mad Money are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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