Jim Cramer: Acknowledge This Sea Change

NEW YORK (Real Money) -- Which would you rather own? Would you prefer a fast-growing, profitable, budding monopolist in the vacation-home-rental business that shot the lights out on its last quarter? Or would you rather have shares in a slow-to-no­-growing purveyor of packaged goods at the supermarket that reported a quarter that was disappointing by its own admission?

If you had to think about this answer even for a second, you should fold up shop or go watch the NBA and NHL playoffs, because the answer is pretty simple: You would much rather own the no-growth food company. Now, let me make it real easy: The slow-growing food company is B&G Foods (BGS), with a 4%-plus dividend yield -- which can grow either from the stock going down or from the dividend going higher!

Now, I will make it really easy. The fast grower? It's on the Web! It's an Internet-based Web site manager that takes a cut from vacation properties it features online at its eponymous HomeAway (AWAY) Web site.

Yep, in this tape you need to be eating B&G pickles and owning the stock and staying away from either the real HomeAway site or the stock.


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Now, here's what's so wrong. HomeAway is a monopolist with $3 billion in market capitalization. It makes good money and has a perfect balance sheet with a ton of cash, because it did a cheap-as-can-be convert deal. It is growing north of 30%. It should earn $1 per share in 2016. And yet I think you wouldn't want to buy this stock until it sold at a price-to-earnings relative to growth (PEG) rate of slightly less than 1. That means it can still fall another 10%, easy. In fact, I might be too aggressive even recommending that tight a bid underneath.

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