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Did you miss last night's "Mad Money" on CNBC? If so, here are Jim Cramer's top takeaways.
Analog Devices (ADI - Get Report) : Cramer spoke with David Zinsner, CFO of Analog Devices about the Internet of Things market. Zinsner said, "The Internet of Things is really about taking information from the real world, bringing it up to the cloud, analyzing it, and making decisions based on it." That applies to maintenance and health care, for example.
The IoT industry has plenty of growth, but self-driving cars are quickly becoming a hot growth trend for semiconductor stocks. Analog Devices is taking advantage of the trend with its Lidar product.
Most self-driving cars depend on radar, Zinsner explained, but Lidar is the next game-changing technology that will allow autonomous vehicles to get to the next level.
As for the financials, Analog Devices is a strong cash-flow generator, which will allow it to pay down debt quickly. The company's $14.8 billion deal to buy Linear Technology (LLTC) hasn't closed yet, but that will allow for strong revenue growth.
Analog Devices doesn't have more than 10% of its revenue come from any one customer and it's spread out over thousands of products, so its portfolio has solid diversification, Zinsner said.
Cramer said: This is a great stock to own before or after the deal to buy Linear closes. The company's recent earnings results "blew out" the estimates and despite the recent rally, it looks like there could still be more room, he reasoned.
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Kraft Heinz (KHC - Get Report) ; Mondelez (MDLZ - Get Report) , and Philip Morris (PM - Get Report) ; Altria (MO - Get Report) : Cramer is looking at the market's M&A potential. Specifically, he's looking at a set of companies to get back together after having previously broken up.
He's referring to Kraft Heinz and Mondelez, as well as Philip Morris and Altria.
Kraft spun off Mondelez so investors could have a growth company in the latter and solid, dividend-paying company in the former. However, now that Kraft has merged with Heinz, there is serious chatter about now reacquiring Mondelez, Cramer said.
This move would make a ton of sense, he reasoned. Mondelez would be the growth that the company needs, even though it has done a great job cutting costs and paying a nice dividend.
As for Philip Morris, a Wells Fargo analysts recently said there's a 70% chance it will acquire Altria in the next 6 to 12 months. This is a play that Cramer hadn't considered, but he acknowledged it would make a lot of sense.
The analysts said Philip Morris may justify spending $77 per share on Altria and the deal would be accretive in the first year. Plus, Philip Morris -- which handles international sales -- would need Altria's domestic business to really make its new smokeless cigarette, iQOS, a big success.
Here's the bottom line: These companies may very well be the next big leaders in M&A, Cramer said. If the deals happen, the companies doing the buying are set to benefit as a result.
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Automatic Data Processing (ADP - Get Report) and Paychex (PAYX - Get Report) : While most stocks have already been uncovered either by Cramer or the market and have rallied, there's two on his list that still have upside potential: Automatic Data Processing and Paychex.
These two companies are the largest payroll processing companies in the U.S. and both provide businesses with additional outsourcing and employee management services.
There's a few reasons that Trump would be good for these companies, starting with jobs. As the economy gains steam and companies continue to hire, that translates to a direct gain for ADP and Paychex, as they will now have a larger payroll.
Second, these companies benefit from higher interest rates. Between the time it takes companies to pay ADP and Paychex and the time the companies issue checks to employees, the payroll companies collect interest on the float, Cramer explained.
While interest on a day or two's worth of capital may not seem like much, it's a different story when you're talking about millions of dollars each week. With rates primed to go higher, this is a direct boost.
Finally, lower corporate taxes would boost the bottom line. According to one analyst, ADP and Paychex could see their earnings per share go up 21% and 25%, respectively, from a lower tax rate alone.
Both of these stocks are set to benefit not only from President-elect Trump, but also the Federal Reserve. Paychex reports earnings on Wednesday and given the stock's rally, it could pull back even on good results. That would be a perfect opportunity to buy the stock, Cramer said. Each could be a great core holding for years to come.
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