April 3, 2006
and the LIGHTNING ROUND!!!
A Recap of CNBC's 'Mad Money w/Jim Cramer'.
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o n i g h t ' s D i s c u s s i o n ' s
Level 3 Communications (LVLT)
Conexant Systems (CNXT)
Mindspeed Technologies Inc (MSPD)
Resorts Inc (TRMP)
Smithfield Foods Inc (SFD)
NYSE Group Inc (NYX)
Avanex Corp (AVNX)
Finisar Corp (FNSR)
Burlington Northern Santa (BNI)
PW Eagle Inc (PWEI)
Cheesecake Factory (CAKE)
Ruth's Chris Steakhouse (RUTH)
Seitel Inc (SELA)
Neurocrine Biosciences (NBIX)
Applied Micro Circuits Corporation (AMCC)
Procter & Gamble (PG)
LSI Logic (LSI)
@Road Inc (ARDI)
Chiquita Brands (CQB)
Johnson & Johnson (JNJ)
Continental Airlines (CAL)
Southwest Airlines Co (LUV)
AMR Corporation (AMR)
Steak n Shake (SNS)
Oplink Communications Inc (OPLK)
International Inc (OIS)
Tonight, I will give you people what you want. I will give you the stock I think is the next Hansen (HANS); a Hansen a year ago.
We're talking about national beverage (FIZ)!
The stock is at $11.60. I think it goes higher; I think it's a veritable growth machine.
This company makes non-alcoholic drinks; a lot of third rate soda out there. Have you ever heard of Shasta?
I think this companies growth is going to come from one place, and one place only. They've got an energy drink! It's called 'Rip It.'
When you buy FIZ, you are betting on the success of 'rip it' and not much else.
I don't think you'll see a lot of organic growth here, until 'rip it' takes off. All aboard!
So, why does Cramer think 'rip it' should make these guys a lot of money. Pretty simple. Do you mind if we stroll on over to Walmart (WMT), where they report that the energy drink demand is up 50% this month, versus the last four months.
Why 'rip it'? How about 'red bull?' Hey, why not 'full throttle?'... because 'rip it' has the room to grow!
'Full Throttle' and 'Red Bull' were in 40 out of 40 surveyed Walmarts, okay? I mean, that one's done! 'Rip it' was only in 24 of those 40 - room to rock. That makes it the one with real potential to expand.
Right now, it's only 10% of FIZ's sales. Cramer predicts that will change. First, you're going to get expanded distribution of 'rip it' . Then, they're going to try to put in all the Walmarts. Buy, buy, buy!
Then, once it's out there. Oh man, it's going to rock. Not because 'rip it' has any quality advantage over the competition. But, because this is still an unexploited market.
I think it cuts to cultural issues. When I think about us - our great nation - I think we are a hyper-caffeinated, wired, and joyless society.
The next generation hasn't grown up drinking coffee. They're being raised on 'red bull' from when they're little.
And look, in the future, there will be as many brands of energy drinks as there are of coffee. There is room out there for 'rip it'.
It's already proven itself with strong growth, even though it hasn't had massive distribution. When it does, I think that this thing becomes huge.
And, hey, if I'm wrong, the downside here should be fairly limited.
They've got $37 million in cash; they're sitting on no debt, and the stock isn't valued like 'rip it' will become huge - not at all.
It's not going to disappoint investors if 'rip it' grows at a moderate clip. This stock is owned right now by people who are in it for the very boring soda business.
Now, it's on you to get into FIZ before 'rip it' becomes a brand we all recognize, and the stock gets bought up by energy drink momentum players - the same guys who have taken the Hansen (HANS) up 100 points.
Now, this stock - FIZ - is a little lower in volume than the stocks I usually recommend. Although, lately, it's been trading in big volume.
80% is held by insiders, and it's already a small co., which means the float will be very, very tight.
You need to be careful buying something like this. You don't buy it in after-hours when the jokers in hedge funds take advantage of you and just skin you alive!
Use limit orders. The stock went out at $11.61. If you pay more than $12 (sound of shotgun, and guy jumping out of window) - the house of pain - just a prediction.
The bottom line!: the energy drink play you need to check out right now is FIZ!
I've finally got a Chinese stock that you can't afford not to buy.
It's Tom Online - or just TOMO!
Let me tell you about TOMO! This is an online mobile commerce play. How much do we love mobile commerce on mad money?!! Let me count the ways!
Actually I'm just talking about text messaging, interactive voice response and, of course, downloadable games, ringtones and wireless access on your cellphone.
This is $20 billion industry in china, and the analysts say it'll grow by 20% virtually every year through 2010.
When it comes to this kind of stuff, TOMO is the king!
It is not too late to buy TOMO!
Listen carefully - focus - because I usually hate Chinese stocks - hate 'em.
It's just that china has very little regulatory oversight of its businesses. Most of its big public companies that trade here are still new to the game, or want to rig the game.
TOMO, on the other hand, knows exactly what it's doing. Sure, it's the biggest player in a wireless download industry that's growing very quickly, and is still a sector that is totally undervalued! Buy, buy, buy!
You always want to be in stocks that can under promise and over deliver (UPOD). These are the stocks that jump whenever they report their earnings because they always blow their numbers away. And the reason why they blow them out is that they have set the expectations so low; they've told you that they were flatlining, but then the paddles come out.
They are the masters of the expectations game.
The tenancy in China might be to over promise and then under deliver. But TOMO has low guidance. They've got the numbers they can beat. They know how to play the game American style.
China is the biggest mobile phone market in the world already.
Because TOMO is the biggest co. In business, they have a lot more influence with carriers. That's what makes them best of breed.
And it's best of breed in serious multiple expansion. If they earn $1.03 a share this year - that's the expectation; you know I think it's too low - then they're trading about 26x forward earnings. But, if they earn $1.03, they'll have grown about 21%.
Now, think about it. 26x earnings on 21% growth? That's a bargain! I think it's fair to give it a 29x or 30x multiple. That means you've at least 3 or 4 points to the upside right now. Just because it's undervalued in light of these estimates.
TOMO deserves a multiple expansion and the stock gets bumped up when it beats the numbers.
The bottom line!: when you find a co. That can under promise and over deliver in china, you've got to jump all over it. That's why I think you should buy TOMO!"