Cramer: Give Alliance the Benefit of the Doubt

NEW YORK (Real Money) -- So you want revenue growth, do you? Organic, double-digit revenue growth? Are you willing to pay to get it? Are you willing to suffer through short-term pain in order to get long-term gain?

That's the question facing shareholders of affinity credit card and marketing company Alliance Data Systems (ADS). Alliance is the company behind a great deal of store credit card businesses, and it also runs the frequent-flier programs for many airlines. It has a terrific target-marketed business that demonstrably raises the sales of client companies vs. those of nonclient companies -- by a factor of more than four.

Alliance has also doubled the size of its business over the last six years, and during those six years its revenue has grown at a compound rate of 11%. What an amazing feat, considering the Great Recession and its aftermath. For 2014, the company is guiding to an outstanding rate of 22% revenue growth, with targets for 14% core earnings growth and 22% core earnings-per-share growth.

But the last quarter missed. There were some lines that were weaker than expected. Still, though, I would say the principal reason Alliance missed was that it has been on a huge hiring spree in order to ramp up many of the programs it has won. It is building U.S. call centers, which are far more expensive than ones in India -- because Ed Heffernan, the CEO, who has generated a 500% return in the stock over the last five years, thinks the U.S. customer wants to talk to Americans. He has demonstrated time and again that that has been the case.

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