NEW YORK ( TheStreet) -- When it comes to investing, there are a lot of factors to pay attention to, Jim Cramer told his "Mad Money" TV show viewers Thursday. During earnings season, perhaps the most important factor is a stock's share price. Cramer said that too many investors have been asking whether this has been a good or bad earnings season so far. The question they should be asking is whether stock prices have run up too far, or not enough, ahead of those earnings. Case in point, Yum Brands ( YUM), a company Cramer recently sold from charitable trust
Executive DecisionIn the "Executive Decision" segment, Cramer sat down with Klaus Kleinfeld, chairman and CEO of Alcoa ( AA), to talk about the company's outlook as well as its many green initiatives to help the environment. Kleinfeld mentioned the many different industries that are booming for Alcoa, starting with aerospace, where the company just raised its forecasts. He said that Boeing ( BA) now has an eight-year backlog and its newest 737 jet will be made of all aluminum, which affords it a stronger, lighter frame that's 50% more fuel efficient. Autos is another bright spot for Alcoa, where the company is helping carmakers achieve 20% better fuel economy by using lighter, aluminum frames and components. Kleinfeld was also bullish on shaped cans, which are replacing plastic bottles for many soft drinks. He noted that aluminum is infinitely recyclable and that 75% of all the aluminum ever mined is still in use today, an amazing statistic. Kleinfeld dispelled the rumor that increased recycling hurts Alcoa's bottom line. "Alcoa loves recycling," Kleinfeld said, as the company has a huge recycling plant and recycling takes only 5% of the energy that mining does. Thus the company can sell recycled aluminum at far higher margins than new. Other highlights included computers, where Kleinfeld said products can be made lighter, stronger and run cooler -- thanks to aluminum -- and turbines, which allow jets to run more efficiently with better emissions when made with the metal. Kleinfeld closed by also dispelling the notion that China is flooding the market with aluminum. He said in fact, China produces and uses 40% of the world's aluminum. The problem, he noted, is that China's aluminum is the dirty kind, which uses a ton of water, energy and other resources to produce. Cramer reiterated his bullish recommendation of Alcoa. In the second "Executive Decision" segment, Cramer once again spoke with Chuck Bunch, chairman and CEO of PPG Industries ( PPG), a stock that just hit a fresh 52-week high.
Bunch said that he's bullish on the U.S. economy, noting that end markets including autos, aerospace and even construction are showing signs of strength. The low price of natural gas here in the U.S. has been a windfall, he said, for not only PPG but also for the chemical industry and the overall U.S. industrial sector. Expanding on that notion, Bunch said that the U.S. is now very competitive with China when it comes to energy intensive businesses, now that natural gas here sells for just $1.90 vs. $6, more than three times that amount, in China. The price of natural gas combined with inflating wages in China means that the cost advantage China once had is rapidly diminishing, he said. Bunch said the PPG will continue to invest capital into both the U.S. and China over the coming years and he expects that both markets will continue to do well. However, if the U.S. revamps its tax policy, Bunch added, the U.S. could pull into the lead. Finally, when asked why PPG decided to exit the glass business and instead focus on coatings, Bunch said that glass became a commodity business, whereas coatings requires proprietary technology to meet customers' specific needs while at the same time being far less capital intensive to produce. Cramer remained bullish on PPG Industries.
Mad Tweets: GNC vs. Vitamin ShoppeIn the "Mad Tweets" segment, Cramer responded to questions sent via Twitter to @JimCramer. When asked whether GNC ( GNC) or Vitamin Shoppe ( VSI) is the better play on nutritional supplements since both stocks are near their 52-week highs, Cramer dove right in. GNC is the more established player, said Cramer, with 7,600 stores in all 50 states, plus some internationally. Vitamin Shoppe is smaller, with only 520 stores, all of which are company owned. This gives Vitamin Shoppe the edge when it comes to growth, since the company is operating from a smaller base. But when it comes to other matrices, GNC takes the cake, said Cramer. For example, Vitamin Shoppe saw same-store sales increase 7.4% last year, GNC saw a 10.1% rise and gave upside guidance. Vitamin Shoppe's margins stand at just 9%, compared to 16% for GNC. Plus, GNC sports a stronger balance sheet and a small dividend to boot, noted Cramer.
Then there's the issue of execution. Cramer said that GNC seems to have a better understanding of what its customers want, catering more toward sports products that keep customers coming back regularly for more. Finally, when looking at these companies' valuations, GNC trades at just 16 times earnings with a 24% growth rate, compared to 21 times earnings at Vitamin Shoppe with a 21% growth rate. That's why when it comes to the vitamin market, GNC is both the better company and the better stock, Cramer concluded.
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