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NEW YORK ( TheStreet) -- The markets need to show more respect for well-run companies, Jim Cramer announced to his Mad Money viewers Thursday. Cramer said what seems overvalued on paper today might surprise you and be in a whole new category tomorrow.
Companies executing well have been a big part of the market's recent move, Cramer continued. Case in point" Costco (COST - Get Report), a stock that was featured in a negative article the front page of today's Wall Street Journal, only to deliver a strong 8% rise in same-store sales hours later. Costco was not "left in the cold" as the article suggested, it was undervalued and underestimated.
Then there's Kroger (KR - Get Report), our nation's second-largest grocer, which saw its share rise 7% on the day. Cramer said Kroger continues to innovate on every level, consolidating a fragmented industry, bringing down costs and boosting high-margin private label offerings. Bubble? No, value.
In the biotech space, Cramer highlighted Pharmacyclics (PCYC), which popped 10% on a takeover bid from Abbvie (ABBV - Get Report), a stock which Cramer owns for his charitable trust, Action Alerts PLUS. Pharmacyclics seemed like a bubble yesterday, up 88% so far this year, but today a smart company swooped in and took it to a whole new level. Could other Cramer faves like Isis Pharmaceuticals (ISIS), Receptos (RCPT) or BioMarin (BMRN - Get Report) be next?
All over the markets, companies are making smart decisions, Cramer said, like NXP Semiconductor (NXPI - Get Report) making a stellar acquisition where one plus one really does equal three, or maybe even four.
Great execution can also be seen in the restaurant space. For years, Darden Restaurants (DRI - Get Report) was poorly run and its stock suffered. But today, Darden is well run and its stock it on the move.
It's a great time to be a defense contractor, Cramer told viewers. Just look at the results of stocks like Boeing (BA - Get Report), up 33%, Lockheed Martin (LMT - Get Report), up 20%, and Action Alerts PLUS holding, United Technologies (UTX - Get Report), up 24%, since the markets' Ebola-induced lows in mid-October.
But while the markets clear like the big boys, Cramer said he's focused on a small, newly minted defense name, Orbital ATK (OA), the combination of Orbital Sciences and ATK Systems, which closed just last month.
Cramer said the new company is still small, valued at $4 billion, but deserves to go much high. Orbital ATK now has its hands in everything from ammunition to advanced space and flight system technology. The new company will derive 26% of its revenue from space systems, which includes some 95 satellites currently in production and 800 already in orbit; and 42% from defense, such as small and medium caliber ammunition.
Shares of Orbital ATK currently trade at just 13 times forward earnings, a steal compared to its peers, which average 17 to 18 times earnings. Orbital ATK also sports a modest 1.9% dividend yield, but has the possibility for a dividend boost and stock buyback program once the new company gets settled.
Cult Stocks Return
Are the cult stocks mounting a comeback? Cramer said it appears so, with Tesla Motors (TSLA - Get Report) leading the charge, holding in after reporting a miserable quarter that has led to multiple downgrades and estimate cuts. After reporting the company sold just 20 cars in China, compared to 30% of its total production as the company forecast, Cramer said he still doesn't want to go anywhere near this stock.
Other cult stocks, such as Amazon.com (AMZN - Get Report), are just off their highs, marking time before making the next move higher. Shares of Netflix (NFLX) also appear to be resting because this beloved stock seems cheap when compared to the prices being paid for recent acquisitions.
Whether it's MobileEye (MBLY), Alibaba (BABA - Get Report) or GoPro (GPRO - Get Report), Cramer said these stocks continue to hold their own because there just aren't that many cult stocks to choose from these days.
Executive Decision: Mark O'Neil
For his "Executive Decision" segment, Cramer spoke with Mark O'Neil, chairman and CEO of Dealertrack Technologies (TRAK), a provider of web-based software for auto dealers that saw its shares tank 8.7% when it last reported earnings.
O'Neil characterized February's slow auto sales as simply a weather-driven event and not something investors need to worry about. He said Dealertrack expects to see the lost volume recover over the next few months.
When asked about a recent Wells Fargo (WFC - Get Report) decision to cap sub-prime auto lending, O'Neil noted that there are 1,600 lenders offering auto loans, so other banks will quickly step in to fill the void. Additionally, he noted the one reason there are more sub-prime loans is that more cars are being sold and more consumers are being classified as sub-prime.
Finally, when asked whether Tesla Motors' non-dealership model might catch on, O'Neil said that he thinks not. Even Tesla might change its strategy to a hybrid model over the next few years. The dealership is an important touch point for customers, he said, and part of the experience is lost without it.
Cramer said Dealertrack is a bargain and the stock's recent blip makes it even more inexpensive.
Am I Diversified?
In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.
Cramer blessed this portfolio as properly diversified.
Cramer said this portfolio was also diversified.
The third portfolio had Exxon Mobil (XOM - Get Report), Chevron (CVX - Get Report), General Electric (GE - Get Report), Cisco Systems (CSCO - Get Report) and McDonald's (MCD - Get Report) as its top five stocks.
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