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The Canadians are coming!
Investors should take note of
because more Canadian buys of U.S. banks are on the way, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.
Thanks to a strong Canadian dollar and great stock value, Canadian banks are primed to absorb American regional banks, which lately have been viewed as small institutions with little room for growth.
Unlike Chinese or Arab investors with the cash to buy American companies, Canadians are "warm and lovable," meaning the U.S. government will not intervene in Canadian acquisitions of U.S. companies.
Furthermore, if big Canadian banks want exposure to the American Northeast, they need to acquire multiple banks. "I see more than just Toronto Dominion getting in the game," Cramer said. Cramer compared Northeast regional banks with Frito-Lay products, saying Canadian banks "can't eat just one."
With the Canadian dollar up 12% against the U.S. dollar since last year, Canadian banks can get more for their money by acquiring American banks, Cramer said. Additionally, Canadian banks' stocks are up, even adjusting for the strength of the Canadian dollar. For example, Canadian Imperial is up 31% and Bank of Nova Scotia is up 23%.
Some claim that that TD's payment of 2.8 times book value for Commerce was "silly generous." Cramer told viewers that that view was completely wrong, and he expects very high markups in acquisitions of several more banks, including:
New York Community Bancorp
Hudson City Bank
Fifth Third Bancorp
Misguided Markdown at CVS
The market held a fire sale on
today. The decline in CVS was negative pin action from disappointing earnings by
Cramer called the market "dumb" for lumping CVS and Walgreen together, especially when CVS hedged against what hurt Walgreen this quarter. Walgreen's problems are internal to Walgreen and have nothing to do with CVS' performance, Cramer said.
Walgreen blamed low earnings on lowered drug reimbursement rates. Coupled with cost problems stemming from high salaries for their workers, the reduced revenues caused the stock's slump.
CVS, on the other hand, saw the reduction in reimbursement rates before it happened, buying Care Mark, a company that makes reimbursement payments. In other words, CVS bought a company that benefits from the flood of generic drugs that hurt Walgreen's revenues.
In light of CVS' foresight and Walgreen's inability to perceive an obvious development in the drug market, Cramer considered transferring "best of breed" status for pharmacy retail to CVS.
Looking for comScore Score
Cramer is looking for another stock that will perform as well as
, which has shown substantial gains since he recommended it on May 15.
bears a resemblance to Aecom in that its IPO was relatively unnoticed and received little institutional support, Cramer said.
ComScore measures raw data on usage, and behavioral and transactional trends on the Web. Cramer compared it with Nielsen and
( ARB), companies that measures television and radio consumer behavior.
Viewers might think that a company like comScore is superfluous because
( OMTR) already measures Web sites' traffic and user behavior.
The difference, Cramer said, is in internal vs. external numbers. ComScore provides information about other Web sites, instructing companies as to where they should advertise and the online behaviors of their target consumers.
ComScore is smaller than Nielson and Arbitron and is situated in the fastest growing consumer research market: the Internet. Moreover, Nielsen could be in a position to simply buy comScore, Cramer said.
Because comScore is already profitable, has great earnings visibility, a very high retention rate and great growth, it's in a position to become a "natural monopoly" and become the next Aecom. Additionally, Credit Suisse and Deutsche Bank recently gave it a buy rating.
Perry Ellis CEO Speaks to Cramer
CEO George Feldenkreis to the show. He emphasized the strength of Penguin, an American brand that Perry Ellis has revitalized by placing it in Niemen, Saks and Nordstrom's. Feldenkreis anticipates that in five years Perry Ellis will grow from a $40 million to a $200 million brand.
Speaking about Perry Ellis' expansion into Asian markets, Feldenkreis mentioned limited penetration in Vietnam, and licensing agreements specific to Taiwan and Korea. The company is currently hoping to announce licensing agreements for China and India, which would substantially expand Perry Ellis' consumer base.
In a brief "Sell Block" segment, Cramer advised viewers to sell
Cramer was bullish on
Vasco Data Security
Sociedad Química y Minera de Chile
National Oilwell Varco
Research In Motion
Cramer was bearish on
Xinhua Finance Media
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At the time of publication, Cramer was long Caterpillar and CVS Caremark.
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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