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"I stand corrected on
," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. "It is a buy."
Cramer said he had been negative on the stock because he assumed it was just another nutrition-supplement player and multilevel marketer, no better than
Usana Health Sciences
. "But I was wrong," he said.
In fact, Herbalife "does not belong at the bottom of the barrel" and deserves to trade higher, not lower, Cramer said. The company not only had better-than-expected earnings in its most recent quarter, but it also won approval in China to sell its products directly in two provinces, he said.
Herbalife has "a high-margin business model" and generates a lot of free cash flow, Cramer added. Plus, the company is buying back stock, has a 2% dividend and is even benefiting from the weak dollar because of its exposure outside the U.S.
Even after all those positives, Herbalife is selling more cheaply than its peers, Cramer said. But he doesn't believe that should last. This stock is inexpensive and it's not going to stay a market secret forever, he said.
Michael Johnson, Herbalife's chief executive, has turned the company around and now people can get in "artificially low," said Cramer.
Further, said Cramer, Herbalife might be a controversial name, but its supplements seem to work. It is a triple buy, but don't put in orders before the stock starts trading in the regular market session, he advised.
Infrastructure Play: Aecom
When Cramer first recommended
, he said he had no idea it would go up so much. In fact, Foster Wheeler has run up so high that now Cramer feels the need to find people the next great infrastructure play. Cramer introduced
as just that.
Aecom is a "great California-based infrastructure play," whose initial public offering "should have been a huge success," Cramer said. However, because the tape was weak when it came public last week, Aecom remained flat. Now that there is a lot more strength in the market, Cramer believes Aecom is going much higher.
The company has global exposure and a lot of great contracts in its pipeline, with a "huge presence" in Dubai and Abu Dhabi, he said. Also, it is "a big beneficiary of the privatization of the government," Cramer continued.
The one big difference between Aecom and players like Foster Wheeler or
is that its book of business has a little less energy and is instead more diverse, he said.
Aecom's backlog was up 63% year over year in 2006, and at the end of March, the company's backlog was up even more, Cramer said. If people want exposure in the infrastructure sector and they feel like they missed the big run in plays like Foster Wheeler or McDermott, Cramer said they should consider getting into Aecom.
H-P's Turnaround King
Continuing with his weeklong series of "transformational managers," Cramer announced
Mark Hurd as the next name on his CEO Wall of Fame list.
Hurd took over HPQ, which Cramer owns for his charitable trust,
Action Alerts PLUS, on March 29, 2005, replacing Carly Fiorina, Cramer said. And in the couple of years that Hurd has run HPQ, the stock has doubled.
Before, HPQ was in "disarray," and Cramer said he didn't have much hope Hurd would be bale to turn it around. However, the CEO "proved me wrong," he said.
At the point when Hurd stepped in as chief executive, HPQ was trailing
in terms of market share for PCs. In addition, it had "bloated" payrolls and a server business that was "laughable," Cramer said. And the former CEO Fiorina had missed the estimates of so many quarters, she was famed for overpromising and underdelivering.
After two years of Hurd, HPQ now exceeds estimates, is above Dell in PC market share, and underpromises and overdelivers, Cramer said.
"Owning stocks with great leaders is its own reward because these stocks go higher," Cramer said. "That's why I want you with Mark Hurd. That's why I want you with Hewlett-Packard."
Harrah's Lets It Ride Private
Cramer welcomed Gary Loveman, chairman and CEO of
, to the show and asked him to explain why it's better for a company to be private than public.
Loveman said that after a company is taken private, its management team is no longer distracted with meaningless business activities, and is able to focus on "things that really do build value" for the business over time.
"The company is being run now to a large degree as if it's private, so I'm living a bit of it now," Loveman said. "It opens up other avenues for value creation."
If a company is private, it is able to save money and "mature gracefully," he added. Whereas, in the public market the company is uniformly focused on income statements, and any project is considered a good project until it fails to bring in money.
To view Cramer's interview with Gary Loveman, please click here.
Cramer was bullish on
Dick's Sporting Goods
Cramer was bearish on
Central Garden & Pet
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At the time of publication, Cramer was long Caterpillar, Goldman Sachs, Hewlett-Packard, NYSE Euronext and Sears Holdings.
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