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Baby boomers are exercising past the age of 50, despite wear and tear on the body, and that trend shows few signs of abating, Jim Cramer told "Mad Money" viewers Thursday in a rebroadcast of an April segment.
There are stocks to be bought on this trend, Cramer said, including the leading company in the sports medicine business, DJ Orthopedics
He said that the company has every kind of knee, ankle, elbow and lower-back brace you can think of. Moreover, it just completed an acquisition of "the most important
knee brace in the world."
The company just bought
, "the Moby Dick of knee accessories." And Cramer said that the stock jumped 13.5% to nearly $40 after the deal from about $29 before the deal.
But never buy a stock just because you like the product, Cramer said. That's just what gets you interested in the company, but then you have to do your homework.
He said he would wait for a pullback before buying. He added that the company deserves a 23 multiple, which is where most small-cap orthopedic companies trade. If it earns $2 a share, Cramer said that could take the stock to $46.
You might know how to read, but you need to learn how to read behind, outside, all around the lines to make money, he said.
Between the Headlines
However, Cramer said when he recommended buying
on March 20 from a headline in the
The Washington Post
that read: "Internet Phone Start-Ups Look Past Low Prices," he was wrong.
"Although I read the story correctly, Mindspeed was a bad house in a good neighborhood," he said.
The article said that hundreds of new companies have cropped up to sell service in the past couple of years and that venture capitalists are pouring money into the industry.
"The article is telling you that millions are going to Internet phone companies to build infrastructure," Cramer said.
If he had written the article, the headline would have read: "Hundreds of Millions of Dollars Pouring into VoIP. ... So Buy Mindspeed Technologies."
Cramer believed that this company would get a big share of the buildup because it makes processors and fiber to the premises, or FTTP, necessary for VoIP.
Fiber to the premises, he said, is a business that also includes
This will be the next cheap little optical company to make a move, he said.
Plus, the stock was down more than 10%, so Cramer believed that the time was a good opportunity to buy.
Cramer said the stock had been a disaster up until then because the markets that it serves have "been abysmal up until very recently." But Cramer believed they were finally in bull mode.
In the end Cramer said he was not right about Mindspeed. So, although it is important to read between the lines, he said that reading comprehension skills are also needed.
Next, Cramer showed his viewers how to read
-- "Cramer style."
On Nov. 4, Cramer said he was extremely bullish on "extreme" sports retailer,
. He said this based on an article he read in the newspaper about extreme sports like snowboarding going mainstream.
If this is true, Zumiez is the stock you need to own, Cramer had said.
Most importantly, Zumiez "stands up to the homework test," he had said. The company reported October same-store sales growth of 10% vs. expectations of 5%, said Cramer.
In addition, total sales were up 29%.
The company has 164 stores, mostly in the West, but is expanding into the Midwest and the East. It has opened 31 stores so far this year and has four more in the works in the next two months, said Cramer.
With gas prices coming down, Cramer believed that people who may have been reluctant to travel very far to ski and snowboard would rethink their plans.
"If Zumiez can do this kind of growth in an environment where gas is expensive, just imagine how well it will do as the price of gasoline comes down," he said.
On November 17, Cramer commented on a
Wall Street Journal
article about the relative merits of betting against short-sellers and said that "there's money to be made in heavily shorted stocks, but only when they're good ones."
The article listed the most heavily shorted stocks on the
, and Cramer broke down the stocks one by one.
Accredited Home Lenders
: Cramer is not a fan of the company's nonconforming loan business. He believes that the stock goes lower.
: The company missed estimates the last two quarters, said Cramer, and he believes that estimates are still too high. "I don't like it."
Red Robin Gourmet Burgers
: "Absurdly expensive" at 32 times 2005 earnings forecasts, said Cramer.
: Cramer believes the stock will "keep going lower and lower."
Martha Stewart Living Omnimedia
: MSO deserves to trade at $12 without Martha hype. MSO closed at $17.80 Thursday.
: Cramer said he believes that the shorts expect number cuts. "I can see that," he said.
: "I'd be short the homebuilders if I was at my fund right now."
: Cramer believes the shorts are wrong and would do a 'mon back* on the cement maker.
"That's funny. I thought there was a cement shortage in this country," he said, adding that the company is increasing prices and has great cash flow and a good buyback.
"Their only problem is they don't have enough capacity to meet demand. That's what I call a high-quality problem."
The only thing Cramer could see hurting the company is if there is a repeal of the tariff on Mexican cement coming into the U.S.
Retail in Detail
Moving on with his reading lesson, Cramer told his viewers how good reading helped him find stocks during the last holiday season.
On November 21, Cramer said that according to a
Wall Street Journal
article, online retailers cleaned up the Monday after Thanksgiving.
Throughout the holiday season, Cramer said online retail sales were expected to grow 18% to $26 billion last year, so he wanted his viewers to buy
United Parcel Service
for a trade.
UPS will be the single biggest beneficiary of the growth in shopping over the Internet, said Cramer. "It's the obvious pin action play," he said. What's more, UPS is in "great shape right now because gasoline prices are falling."
The move to online retailing is part of the overall growth trend of Internet, he said, such as advertising dollars moving from newspapers to
, he said.
Cramer also very much likes
, but he gives the slight edge to UPS.
, Cramer said the company has nothing proprietary, is seeing competition "from everybody" and is "being eaten alive by shipping costs."
Amazon's earnings "never exploded" like they did for Google and Yahoo!, he said. Cramer would sell Amazon.
Finishing up his lesson on how to make a profit by reading the newspaper, Cramer suggested looking into trade publications.
He said that although they are boring and not very well-written, there are trade publications on every business that will give people a jump-start into looking at quality stocks.
*For all you home-gamers, a 'mon-back opportunity means Cramer would back up the figurative truck and load up on a stock.
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At the time of publication, Cramer was long Yahoo!.
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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