Jim Cramer's 'Mad Money' Recap: Thank You, Corporate America

 

 

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NEW YORK ( TheStreet) -- With the S&P 500 hitting new records again today, Jim Cramer told his Mad Money viewers Monday they shouldn't be thanking the Federal Reserve, they should be thanking individual corporate CEOs.

Cramer said the market's skeptics still feel the current powerful rally is undeserved, being spurred only by the Fed's cheap money policies. But that's totally false, he said. It's corporate profits that are fueling ever higher stock prices, and that growth is only accelerating.

Corporate America is administering a big dose of self-help, Cramer told viewers, as they're not only doing more with fewer workers and more technology, they're also buying up the competition.

That's why a stock like InterMune (ITMN) was able to rally 35% in a single day after receiving a takeover bid and why both Tim Hortons (THI) and Burger King (BKW) were able to rally 19% after their merger was announced. These deals are all about accelerating growth, Cramer explained.

In today's economy we have too much of everything, Cramer continued, and that means too much competition and lower margins. That's why in industry after industry, from airlines and biotech to restaurants and technology, the wave of consolidation continues.

So as the markets hit record highs, don't thank the Fed, Cramer concluded, thank CEOs for taking control of their own destinies and working hard for you, the shareholders.

Executive Decision: Cheryl Bachelder

For his "Executive Decision" segment, Cramer spoke with Cheryl Bachelder, CEO of Popeye's Louisiana Kitchen (PLKI) , a stock that's up 357% over the past five years but has been struggling of late with the broader restaurant sector.

Bachelder said her company is doing exactly what it needs to do -- building the Popeye's footprint both here in the U.S. and around the world. She noted that Popeye's could double its size in the U.S. alone, then take advantage of many opportunities overseas. Over time, Bachelder said, the markets will recognize the company's solid, consistent performance.

Bachelder also commented on her company's decision to buy back all their recipes. She explained the company's founder retained those recipes and Popeye's was paying a $3 million annual royalty to use them. Now those belong to Popeye's and are secure for perpetuity.

When asked about the stock buyback program, Bachelder said her first priority is organic growth. After that, the company's stock buyback program is also a priority, which is why it plans to buy back $20 million to $30 million worth of Popeye's stock this year.

Cramer said it's not too often investors get a discount on a quality restaurant stock but they're getting one now.

CSI: Cramer

When stocks are left for dead by the markets, Cramer's Stock Investigation, or CSI, unit is on the case, looking for clues as to what happened and whether there's anything investors can do about it. Tonight, he looked at the restaurant stocks of Red Robin Gourmet Burgers (RRGB) , Bloomin' Brands (BLMN) , Noodles & Company (NDLS) , Potbelly (PBPB) and Chuy's (CHUY) , all of which were victims of a market hit-and-run.

Cramer said all five of these stocks had one thing in common -- they were all much-hyped growth stories touted to be the next Chipotle Mexican Grill (CMG) . Unfortunately, when managements stumble, the value investors head for the exits in droves.

Red Robin shares doubled in 2013, but after growth stalled shares have plummeted 30% so far in 2014. Cramer called the chain's most recent quarter a huge disappointment and said investors need to stay far away.

Noodles & Company had a much-hyped IPO in June of last year but has been declining ever since, with the company posting a nasty earnings miss with declining same-store sales. Similar story with Potbelly, with that stock being cut to pieces and still having a outrageously high multiple, Cramer noted.

Chuy's is also following the same pattern, said Cramer -- the company is focused on opening new stores while the existing ones are floundering through mismanagement.

Finally, there's Bloomin' Brands, purveyors of Outback Steakhouse and four other chains. Cramer said this stock is also down 32% this year. Its growth has stalled and management struggles to right the ship. He advised investors to steer clear of all of these stocks because their shares have not yet found a bottom.

Executive Decision: Mark Trudeau

In his second "Executive Decision" segment, Cramer sat down with Mark Trudeau, president and CEO of Mallinckrodt Pharmaceuticals (MNK) , a fast-growing biotech located in the much-sought-after domicile of Ireland.

Trudeau explained that Mallinckrodt has always been an Irish company since its creation in 2009. While that affords the company some advantages, the focus continues to be on creating value to patients.

Trudeau continued that Mallinckrodt is always on the lookout for companies that offer a good strategic fit to what it is doing internally. He said the company's two most recent acquisitions -- Cadence and Questcor Pharmaceuticals -- were two such deals that will offer long-term benefits for patients and shareholders alike.

When asked about the controversy surrounding the acquisition of the drug Acthar, Trudeau explained that Acthar is available for 19 indications and is usually a drug of last resort when others have failed. So he's not worried, as some are, that insurance reimbursements may diminish over time.

Cramer said Mallinckrodt remains a well-run company with a terrific outlook for growth.

Lightning Round

In the Lightning Round, Cramer was bullish on SunTrust Banks (STI) , Palo Alto Networks (PANW) , NuStar Energy (NS) , Exact Sciences (EXAS) , The Blackstone Group (BX) , Amkor Technology (AMKR) and Monolithic Power Systems (MPWR) .

Cramer was bearish on Barracuda Networks (CUDA) , Brookline Bancor (BRKL) , Symantec (SYMC) and Resource Capital (RSO) .

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said one of the biggest changes he's seeing in the mergers and acquisitions space isn't tax inversions, it's the definition of the term "bolt-on" acquisitions.

Cramer explained that typically, when management wants to calm the fears of investors, they point out that no, they're not interested in expensive, game-changing acquisitions but rather simple, small, "bolt-on" additions to their product portfolios.

That's why when the management of Roche (RHHBY) called its $8.3 billion bid for InterMune a "bolt-on" acquisition, Cramer did a double take. He said Roche paid a 38% premium for InterMune, a stock that was already up 265% for the year. If a deal like that is now considered a small, bolt-on deal, then that will mean the bar has been raised and dozens of other biotech stocks have just become takeover candidates.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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-- Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had a position in STI.

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