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(1-800 FLOWERS.COM, INC. )
you want to impress your portfolio? Buy it some
flowers that is.
been able to set this business up by making a series of smart
acquisitions, that just add onto the business - bolt on acquisitions.
I know what you're thinking - 1800flowers - sounds like that bad kind
dot-com. You're thinking that, in the middle of the 2nd
this is the kind of co. that you don't want to own.
You're thinking is wrong!
I think 1800flowers (FLWS) is ready to break out; this stock is for you!
It's the anti-Amazon.com (AMZN). What's that mean? It means,
Amazon (sell, sell, sell!), this co. makes massive amounts of money on
Let me tell you why I think you should buy yourself some
this is a multi-part story:
it helps to have a reason, but it's even more helpful to have multiple
for owning a stock.
FLWS has a smart model. It just had a big court decision go
its way and,
best of all, it's cheap! How often do you find a cheap
stock? One with 18.8% earnings growth? Let's just
First, this co. has a great premise. FLWS is a one-stop
online shop for
all of your gifts, candy and floral needs.
Half of their orders originate on the web, and they've got a database
If you want to understand how brilliant their strategy is, we're going
to use some traditional gender stereotypes to explain their success.
we're clueless about what kind we should get or how. So, we
1800flowers.com, and we buy all of our apology goods on the website!
For example, they just bought Fanny Mae, the confectionary co. - the
- for $80 million. And, now, they can sell these candies on
the website -
Remember guys, if she's mad at you, go on the website and get here some
Or, if you really want to get forgiven, buy her some wine on the
with the chocolate and some flowers.
Up until recently, a lot of states had ridiculous and illegal
importing wine from other states. But now, the Supreme Court
that you can't bar shipments of wine anymore from another
state. And you
can't charge special fees for it either!
Now FLWRs will be able to sell a lot more wine, and they'll still have
more growth. And that is not only not in the estimates; it's
not being factored in by any analyst.
The kicker is that this stock is cheap - really cheap!
'Mon-back as in
'mon-back the truck cheap!
It's been depressed for a couple of years. I think that's
change... Buy, buy, buy!
FLWS trades - get this - at 20x 2007 earnings on 18.8%
scratch-head valuation. That's barely more than 1x growth for
a co. That
should be able to fatten up its margins - that's right, I see expanding
margins here - and should even see the holy grail: accelerated
A 20 multiple on almost 19% growth? That's way too
rarely have a chance to get into a stock like this, where the business
and the market doesn't care!
Best of all, FLWS is hated - totally despised by the
analysts! (The house
of pain). I think the people that are covering the stock are
have to eat some crow, if not some lime, when they upgrade the
Because it is going higher.
Remember, we don't listen to analysts. We try to anticipate,
their every move and, sometimes, we try to break them on mad money.
And hey, if FLWS stays this cheap, I think there's a chance they get
a bid. I think the Amazon (AMZN), or the IAC interactive -
both of which
have no pin action - I think they might take a run at FLWS.
The bottom line! it's time for you to stop and smell the darn
flowers. It's time for you to buy FLWS!
Would I like it as a pullback to 6.50? Most
certain. But I’d buy a
little bit here and then wait for a pullback. FLWS - for some
(CRYPTOLOGIC, INC. )
"We're going bowling tonight
for some pin action!
Internet gaming plays are absolutely en fuego, in an extraordinary
I'm talking about
the British and the offshore plays.
Take a look at
the three biggest British online gaming companies:
888 holdings (888)
cow! These are just on fire! I mean, unbelievable.
These guys all
moved. Now, it time to find the pin action. That's
right. Who else benefits from their strength?
When you've got
three co.s all gunning for customers, all flush with cash,
because their stocks are at a 52-week high, what do you do?
You go with the
arms merchants! The co.s that supply product.
And that means
you go with Cryptologic (CRYP)!
These guys make
the Internet gaming software for security that all these
British gaming co.s use. Safety of design matters when you're
these games, and the gaming co.s operate them, and designs the
security software. That makes it that the financial
secure; that's their big business.
everything from your typical casino fare, to the whole slate of
Marvel Comics games.
The operators are
having just a huge year. But, all they really do is run
the proprietary games and software of CRYP!
Back in February,
these guys just beat the stuffing out of their
estimates. And they've been buying back the stock like
much do we love that on mad money?
Now, CRYP isn't
just worth buying because they make the weapons of the online
gaming co.s. It’s not just a great buy
because online gambling has
become a serious business, and it's only getting bigger...
CRYP is a great
buy - buy, buy, buy! - Because they may have perfected,
absolutely perfected, my favorite Wall St. Game: UPOD! (Under
The street loves
co.s that give conservative guidance and then dramatically
exceed it! And you know if you buy a co. that's good at UPOD,
announce a qtr.,
make you money. The stock pops, the stock spikes because
the co. has made it pretty clear that they're committed to beating the
and they've delivered in the past.
this: for the past 10 qtr.s - a lot of qtr.s - CRYP has
midpoint of their guidance by an average of 20.8%! Can you
line! online gaming is en fuego, especially in England, where
there's about to be an arms race among the big three co.s, and they
their weapons from our call on mad money. They purchase them
from a stock
down 10 points, really in a fabulous sweet spot. They
purchase them from
(CHATTEM, INC. )
One of the
greatest ways to make money is by picking out the good stocks that
have become scorned! Because somehow they're out of style for
that we're in. They're out of the rotation. They don't fit
sexiness of today's market!
If you want to score at the dance, you go find that girl standing in
corner, with no one paying any attention to her; that's what you should
for: the flat liner.
If you want to score with a stock, you've got to use the same
That's why Cramer thinks you should start courting CHTT!
Do they come any duller than CHTT? Do they have any duller
Bond' and 'Dexatrim' and 'Selsun Blue'? 'Icy Hot'?
Right now though, we're at the part of the cycle where the defensive
with good growth, have gone completely and utterly out of style.
When I say defensive, I mean good performers regardless of the economy.
These high-quality, defensive stocks just aren't sexy enough right now.
We're in a commodity blow-off where everybody and his mother wants to
Let me give you the flipside. My charitable trust owns
Gamble (PG). But
that's part of a
balanced portfolio of stocks.
I don't own PG now for the charitable trust because I think it's about
off. No. I own it because, if everything else falls
should still make money!
I guess I should say I like PG because it's cheap. Everyone's
given up on
it. No one wants that, they want coal.
You pick up the steady growers when everyone rotates out of them, and
aggressive smokestack plays. When investors rotate out of a
stock gets cheaper for no reason involving its fundamentals!
Then, when the aggressive plays eventually fall apart, because the fed
too much; china slows down; we lose our patience with them; everybody
right back into the secular growth stories like PG!
And then you
can make mad money if you own it.
You don't know when the rotation is going to end! So you've got to sock
when everybody's bearish on them because, when they're bullish on them,
On mad money, we're on the lookout for cheap, steady growers when we
I think I found one. I think I found one in CHITT!
Right now, in terms of pricing, I think the stock's actually better
better co., no question. But, oh man, but PG is
big. CHITT is the
junk man's PG!
It's worth only $700 million; it could easily get bought. And
going to be making a takeover bid anytime soon for PG*.
Because chat’s so small, the stock can actually move when you
get a big
Now, let's do some homework, because it's never enough to buy an
stock. Sometimes they'll never come back if the business is
CHITT is one of the most profitable plays on the old brands.
these brands are tried and true; you don't have to put that much money
The story right now, though, is that they've got a ton of new products
market that are already doing well this year.
The only dead weight, frankly, is 'Selsun Blue', which I consider a
brand, now that they've got a new dandruff control shampoo on the
You can't go into a physical therapist's office that doesn't have 'icy
New products mean better pricing and more growth for CHITT.
Oh, and don't forget. Pfizer's having a big auction of its
consumer product lines. The rumor has it that
Colgate’s (CP) got the
inside track there. But, you know what, I think it's going to
be a horse
race, and CHITT could get some.
That'd be a great deal, because then they'd be able to introduce a new
without spending a dime on research and development.
Let's go to the numbers, because that's where the real proof is.
They're generating about $50 million in cash flow, and they've got
million in cash in the balance sheet - a $700 million co., you're
I can see them paying down a big chunk of their $180 million in
bring down the debt - it should boost the earnings - lead to a higher
multiple. This is the virtuous cycle because, remember,
indebted co.s get
The numbers they reported on Wednesday - which brought my attention to
stock - they were solid, but they're not the real story.
The story will be how these new products hit the market in the next 12
with more advertising than CHITT's ever used before. That's
going to put
this thing on the radar screen!
So we need to look at the future. The street's numbers are
conservative. The consensus is that they earn $2.50 a share
2007. Holy cow, is that stock cheap! I mean, it's
at $37 for
And CHTT should hit that number easily with their own products -
the new brands from Pfizer - I’m keeping my fingers crossed
The street's being too cautious. That could mean upside for
you when the
rotation ends. What's left?
Let's value the sucker. CHTT trades at just 16.5x
right. Fancy, showboat brand L’Oreal: 25x
powerhouses, Colgate (CL) and PG*: 20x earnings.
These co.s are indeed better co.s than CHTT. But are they
You're getting a real bargain here, but I don't think it'll last long.
The bottom line! CHTT may not be the sexiest stock around
right now, but
it's too cheap. And you should be able to pick it up before