Every so often a new CEO comes into a company and makes an immediate difference, Jim Cramer told viewers of his "Mad Money" TV show Wednesday.
It's rarer when this happens with a "behemoth," and rarer still when it happens to two behemoths at once, he said. Yet, it has happened to both
, Cramer said.
It is because of this strength in leadership at Coke and Pepsi that Cramer wants people to buy the stocks. The new chief executives at these two beverage companies have done what he believes to be the impossible: They changed the culture of their companies and also the direction in which the stocks were moving.
Coke had "pathetic" growth and looked like a "goner." But then its CEO, Neville Isdell, turned it around, Cramer said. Neville expressed his unhappiness with the company's stagnation, something no one else in management was willing to admit.
He also hired new a marketing team and got Coke's international sales rolling again, he said.
And then Coke went from being a $38 stock to a $51 stock, Cramer said. It's moved, but is not done going up. "We are only starting to see the fruits of Neville's work," he said.
Moving on, Cramer said he believed that Pepsi couldn't get much better. But then Indra Nooyi stepped in as CEO and "pumped new life" into Pepsi's Frito-Lay division by introducing healthy snacks, he said.
Now the company's growth is accelerating from 5% to 7%, and things should only get better for Pepsi under Nooyi's leadership, Cramer said.
Another aspect of Pepsi that Cramer likes is that the company is "embracing youth." It had some of the most popular commercials during the Super Bowl, which not only targeted young people, but also were created by young people, Cramer said.
Coke and Pepsi are much more than cola companies now, courtesy of new management, he said, and predicted that Coke is headed from $51 to $60 and Pepsi from $67 to $75.
Private-equity funds are sitting on billions of dollars. The next stock Cramer believes could benefit from those cash hoards on a takeover basis is
CAKE, he said, just reported its numbers and met its estimates. Now the stock is up big, Cramer said. But it doesn't matter, because it is just the beginning of a ramp. People need to get into CAKE now, he said.
Private-equity firms like to buy companies with big cash flows that are not living up to their full potential, Cramer explained. CAKE has a "pristine" balance sheet with no debt, which is especially attractive to the private-equity guys, he said.
Plus, it has one "glaring" flaw that could easily be fixed: Its prices are too low. CAKE has enough demand to raise its product prices, Cramer said.
If CAKE were private, Cramer believes there would be more room for it to grow outside of its business, and it also would be able to close certain stores that are not working -- without having to worry about repercussions in the stock price.
However, even though CAKE looks attractive from a takeover perspective, a takeover could be tough here, Cramer said. The CEO is also the founder of the company and might not want to sell it, he said.
Though CAKE's price should be a lot higher if it does get taken private, Cramer said he isn't just recommending the company because he believes it's a takeover target. CAKE's fundamentals also need to be good because if there's no takeover, he doesn't want people to be stuck with a "crummy" stock that keeps going lower.
Cramer said have your CAKE because its fundamentals are good.
Am I Diversified?
Cramer's first caller kicked off the show's weekly "Am I Diversified?" segment, naming the following five stocks:
Genco Shipping & Trading
, the last two of which Cramer owns for his charitable trust,
Action Alerts PLUS.
Cramer told the caller that he was diversified and that he wouldn't change a thing.
Cramer's next caller said he owned these five plays:
Level 3 Communications
Cramer pointed out that Solectron is too much like EMC. He suggested selling Solectron and picking up a defense stock. Cramer also told the caller that he prefers Lundin Mining to Northgate Minerals.
In his "Mad Mail" segment, Cramer called rail play
Kansas City Southern
"so right" and said he should include KSU in his pantheon of railroads.
Responding to his next mailer, Cramer said
is about to report, and he doesn't expect its numbers to be good. He advised waiting until after it reports to buy it.
Cramer said the turn at Denny's has been slow, and he doesn't want anyone to buy it on a takeover basis.
During his "Sudden Death" round, Cramer was bullish on
. He was bearish on
Cramer was bullish on
Thermo Fisher Scientific
Cramer was bearish on
Simon Property Group
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At the time of publication, Cramer was long Union Pacific and Sears Holdings.
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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