Happy Days for Panera - Cramer's Mad Money (7/23/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday, July 23.

People better start caring: General Electric (GE), Fluor (FLR), Jacobs Engineering (JEC), ABB (ABB)

Jim Cramer told viewers of his Mad Money TV show Wednesday they better start caring about General Electric.  General Electric is seen as a hidden financial. The company's share fells along with the financial sector, but it has not rebounded in recent days, leaving it a prime buying opportunity. Cramer cited an article is this weekend's BusinessWeek, which called into focus GE's exposure to the financial sector. Cramer said GE is not just a financial. Unlike the financials, GE, with many other businesses, actually made money this quarter, beating Wall Street's expectations and has a pervasive lack of bad news.  Cramer said the company is making money selling its under-performing consumer and industrial segment. The remaining segments, such as its infrastructure division, should all perform well in the coming year. Cramer said infrastructure companies like Fluor, Jacobs Engineering and ABB, are up 36%, 24% and 15% respectively year over year, while GE is down 28% over the same period.

Cramer said GE is the biggest wind player and sees its healthcare segments as an additional driver of growth for the company. He also noted the company's international exposure, which accounts for 50% of the company's sales, and 20% of its sales in emerging markets are further positives for the stock. Cramer asks who doesn’t want the company's 4.5% dividend yield.  General Electric has a fortress of a balance sheet.

But perhaps GE's strongest case, said Cramer, is its recent plans to partner with Abu Dhabi's Mubadala sovereign wealth fund. “The deal can be looked at as almost a second stock buyback program,” said Cramer, who noted that the fund's 10% stake in GE could be worth as much as $3.4 billion worth of stock.  

Bottom line: Cramer said there is an incredible opportunity here for investors to buy GE now, after it has been taken down with financial stocks and hasn't rallied back. 

Happy Day Here Again: Panera Bread (PNRA) 

“Happier days could be here again,” Cramer told viewers. He pondered what would happen if gas and grain prices fell and home price depreciation finally stopped. Cramer said Panera Bread, a stock which fell more than $2 a share today after reporting better than expected earnings, is a good example of a company that would benefit from that scenario. “I think Panera has the ability to be the next big thing,” said Cramer. Panera, he said, is increasing service, is cutting labor costs, has expanded margins and is offering a healthy menu. Cramer said Panera is conservative.  He talked with Panera's co-founder, chairman and CEO, Ron Shaich, to find out how all of this was possible in such a difficult environment.

Shaich said he sees a positive things in Panera's future and doesn't extrapolate anything from weakness in the last three weeks of the quarter. He said that lower gas and grain prices are both positives for Panera. The company had $34 million in excess costs due to wheat. They have been able to buy half of next year’s need for wheat at a much lower cost. He also said that by focusing on the business, the company has been able to decease wait times while increasing gross margins. Shaich said the company sees a lot of growth to come as it carries out its strategy of becoming an alternative to traditional restaurants.

Am I Diversified?

Portfolio 1: Altria (MO), Dow Chemical (DOW), Alcoa (AA), Excelon (EXC), McDonald's (MCD)

The first caller's portfolio included: Altria, Dow Chemical, Alcoa, Excelon, McDonald's.

Cramer called this a truly a great portfolio. He owns both Altria and McDonalds for his charitable trust.

Portfolio 2: IBM (IBM), Johnson & Johnson (JNJ), Bristol Myers-Squibb (BMY), Coca-Cola (KO), Colgate-Palmolive (CL)

The second caller's top holdings included:  IBM, Johnson & Johnson, Bristol Myers-Squibb, Coca-Cola and Colgate-Palmolive. Cramer considered Bristol Meyers and Johnson & Johnson are too similar. He recommended trading Bristol in favor of an oil or financial company.

Portfolio 3: GrafTech (GTI), CVRD (RIO), Halliburton (HAL) and JP Morgan (JPM)

The third caller had holdings in: GrafTech, CVRD, Halliburton and JP Morgan as his top five stocks. Cramer said he'd sell GrafTech in favor of an industrial company like General Electric.

Mad Mail: Sirius Satellite (SIRI), XM Satellite (XMSR), XTO Energy (XTO)

Cramer told a viewer that while he now believes the merger between Sirius Satellite and XM Satellite will get done, with the additional financing needed, he's not a fan of the common stock. He recommended Sirius as a speculative stock only. Cramer told a second viewer he's a buyer of XTO Energy given its recent retreat.

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Comments

[WACG]

I wish I could simply block all blatherings about Cramer The Toilet Bug regardless of what stock he is manipulating. People should realise that the jerk is gaming the market for his own benefit. Cramer tries to have his infantile mindless minions drive a stock price up which he then shorts. He tries to have the same mindless sychophants drive a stock down after he has sold so he can buy it back. If Oprah had any brains she would get in the game and recommend stocks the same way.

[Ron thePearl]

Lets not forget that the fact that G.E. is doing buss. thru co. in Iran also has a bearing on its price, believe it or not.

[stoat1004]

Who can argue against purchasing stock in a company whose business segment is over saturated, highly competitive, and a product which is one of the top three consumers are eliminating from their budgets. Apparently not Cramer. Net income DECLINED by 2.4% from 2006 to 2007. While sales, general, and administrative expense increased by 16.4% over the same time period. It's cheap at 25 times ttm earnings and over 3 times book. Nice pick CRAMER!