Taking a look at offshore outsourcing on his "Mad Money" TV show Tuesday, Jim Cramer told viewers about the two major contenders in this field: the U.S. and India. In the right corner, weighing in at a combined $39.5 billion in annual revenue, there is the U.S. tag team, said Cramer, which consists of Accenture ( ACN) and Electronic Data Systems ( EDS). And in the left corner, from the streets of Bangalore, with annual revenue totaling $5.6 billion, he said, are the Indian challengers, Infosys Technologies ( INFY) and Wipro ( WIT). Setting the stage, Cramer, donning a ref's uniform, said that in the ring are four of the best consulting and outsourcing companies fighting for a bigger piece of the pie. They are all the same kind of company, he said.
Best of BreedWhen management in the U.S. decides that its American employees cost too much, they call in large Indian outsourcing companies such as Infosys and Wipro to save money, Cramer said. There is a growing market for consulting firms, and these two companies are starting to encroach on the American consulting turf, he said. Cramer believes that Infosys has "some baked-in underpromise, overdeliver Indian-style potential." Also, the company has a low 77% utilization level, has another 10,000 hires coming out of training and is getting its China business on its feet, giving it "a recipe for better-than-expected" numbers, he said. Plus, Infosys has a low 12% attrition rate, Cramer said. An outsourcing firm's attrition rate is one of the key metrics for such a company, he explained. It is a measure of how many people leave the company at a given time. On the other hand, Wipro has a higher attrition rate, Cramer said. He told viewers to keep an eye on Wipro as it reports earnings Wednesday morning, but added that he likes Infosys better.
Hudson City HighCramer welcomed Hudson City Bancorp ( HCBK) CEO Ronald Hermance to the show and asked him how his company has remained on the high list despite all the negativity surrounding the banking business. "Quite candidly, our model sets us apart," Hermance responded. "The reason we've outlasted in most credit cycles is that we're retaining all our mortgages and not selling them to the secondary market." This, in turn has led to successful credit quality during the third quarter, he went on to say, pointing out that in the last seven years, Hudson City has not had a net charge off. Cramer says that having no net charge offs is unbelievable. "It's basically only lending to people that don't need a loan but are taking one out for a mortgage deduction." Cramer advised investors who want bank exposure without risk to buy this stock.
Lightning RoundCramer was bullish on Yamana Gold ( AUY), Hydril ( HYDL), DirecTV ( DTV), EchoStar Communications ( DISH), Marvell Technology ( MRVL) and Jones Soda ( JSDA). Cramer was bearish on Crystallex ( KRY), TiVo ( TIVO), Advanced Semiconductor Engineering ( ASX), Select Comfort ( SCSS), Sealy ( ZZ), Tempur Pedic ( TPX), CenterPoint Energy ( CNP) and Nuance Communications ( NUAN). For more of Cramer's insights during the Lightning Round,
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