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If people looked at public leveraged-buyout stocks
AP Alternative Assets
, they might think it is not good to get into LBOs as both of these stocks are down, Jim Cramer told viewers of his "Mad Money" TV show Monday.
However, just because it's difficult to find a good LBO, doesn't mean people should give up, he said. In fact, Cramer has found one LBO firm that he believes is worth buying --
Even though Treehouse may look like a food company, it is a leveraged buyout play that is "an acquisition vehicle and a growth story," he said.
Not only was the company's last quarter "terrific," but also, with each new acquisition it makes, Treehouse brings in more earnings, Cramer continued.
What market players have with Treehouse is "a virtuous circle" because as the stock goes higher, it makes more deals as it trades stock for stock at a better rate, he explained.
The more acquisitions it makes, the more it grows and earns, and the higher its share price goes, Cramer said. And a higher share price translates into more acquisitions.
The time to buy Treehouse is now because the company is at its 52-week high, and this "high share price is the currency it uses to buy other companies," he said.
If people listened to the media, they would be out of "sweet" stocks such as
( OS), which is up big today after getting a takeover bid, Cramer said.
But if market players missed the opportunity to make money on Oregon Steel, they can still profit with
, which is cheap and could be the next takeover target, he said.
The steel industry is experiencing a "major consolidation," Cramer explained. The smaller companies should be taken over by the larger whales, except
, which Cramer believes is too well run to be taken over.
Back in September,
The Wall Street Journal
picked up a story about a steel glut, and before you knew it, every major media outlet seized the story and kept potential players out of these stocks, he said.
Not surprisingly, people panicked and retreated from steel stocks.
However, the media failed to mention these stocks were already selling at five-to-six times earnings because the market had already priced in the glut, Cramer said.
All people heard about was the glut, and these stocks got "way, way too cheap," he said.
Next time people hear about such a glut, the odds are the market probably knows about it, Cramer said.
Right now it's time to buy Reliance Steel, which has good fundamentals because of a series of good acquisitions it recently made in the steel sector, he added.
is a turnaround story Cramer said he believes investors should get into.
Although the advertising company was a "horrid disappointment," had accounting problems and looked as if it was going straight down the last few years, Interpublic is in the process of a turnaround, he said. Further, this has not really been reflected in the stock.
If market players read the latest
, they know that Interpublic recently "snagged a massive contract with
," and it has a deal with
, as well, Cramer said.
Moreover, Interpublic had a good quarter by cutting expenses and raising revenue, he said. Plus, none of the company's deals are under review, which means it is not in danger of losing any customers, Cramer added.
"Wall Street is just waking up to the fact that Interpublic is turning around," he said. "The bottom has been put into this stock, and opportunity is knocking. It is a triple buy."
Carrizo Oil & Gas
CEO Sylvester "Chip" Johnson to the show and asked him why people should buy Carrizo when it has natural gas exposure.
"Short term, there's a little bit of uncertainty, but long term, I think the picture is pretty clear," Johnson responded. "Even in the near-term, gas storage is full, but is only about 4% higher than the highest level it reached a couple of years ago."
When asked about Barnett Shale -- a natural gas field in North Texas -- Johnson called it "a very straightforward, low-risk play," and said Carrizo has "one of the biggest anchorage positions" there for a company its size.
Moreover, Johnson said he couldn't really explain why natural gas has bottomed.
"We looked at the storage numbers and thought after the moderate summer it could go lower," he said. "We had most of our gas hedged, so we weren't worried about it in the near-term, but the fact that it has bounced back now seems a little premature to us."
People who are bullish on natural gas should buy this stock, otherwise they shouldn't, Cramer said, adding that he is not a bull.
During his "Sudden Death" round, Cramer was bullish on
Automatic Data Processing
Cramer was bullish on
GOL Linhas Areas
New York Stock Exchange
Cramer was bearish on
American Eagle Outfitters
Double Hull Tankers
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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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