Skip to main content

tv   Mad Money  CNBC  October 24, 2016 6:00pm-7:01pm EDT

6:00 pm
a couple weeks ago, bought some calls. roll up or sell some. >> qqq, a good hedge. >> red hat, gets you done. i'm scott "mad money" with jim cramer starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. call me at 1-800-743-cnbc or tweet me @jimcramer. >> right now we are dealing with three markets that are really amassed as a single one. first there's the stock market that every day seems so darn heavy. most stocks headed down.
6:01 pm
why? consider it overvalued. they may have the overvalued stocks that people can't live without. and, third, there are the stocks that actually represent living, breathing companies, not companies hostage to the overall gloom. they all combine. on todays like today, the bulls went out. nasdaq climbing 1%. let's start with the living breathing companies because that's all people were talking about today, namely the merger between at&t and time warner. i right now i want to raise a larger point. the terrific ceo of time warner has been arguing with wall street for years claiming his company is worth substantially more than what its stock was selling for. while the stock's been a good one, i thought time warner traded at discount to what it was worth. the anti-network bias has to do with time shifted programming and the endless talk about cord
6:02 pm
cutting. the younger generation just doesn't watch tv the way the older one does, and with a bunch of programming that wall street deems less relevant, the company couldn't shake anybody's notion of the advertising dollars going away no matter how buk us explained it. no matter how many times he said there was tremendous value in the enterprise, people doubted him. meanwhile, movie studio content has been regarded as too episodic even as time warner has built a long term hit machine. one by one buk us shed the parts of his company he thought kept the valuation back. allowing the goodness of time warner's crown jewel, hbo, to shine through. for a moment, it seems that all of his hard work would go for naught because fox snuck in with an $85 bid. buk us thought the offer was highway robbery. seems strange, but he did, and he refused to negotiate. and fox did go away. time warner stock then enjoyed a good run subsequently, going a
6:03 pm
few points past the $85 bid. then it fell back. why? it went to the 60s because of the same old worries i just pointed out. at no point did buk us waver. i know we got frustrated with wall treat for not seeing all the good news when his stock languished back in the 60s. but in the end the man was dead right. patience yielded $107.50. what a bid from at&t, more than $22 higher than what fox offered. while stock is still a far distance from that, it's when you get if the deal actually goes through. in retrospect, wall street completely misvalued time warner, enterprise. the stock simply did not reflect the company's truth worth because the ultimate arbiter is another business swooping in to make an acquisition, not the incredibly fickle nature of the stock market which hangs on every word of some fed governor or fed president. or the price of oil. what does that have to do with this? we have three markets not one,
6:04 pm
and time warner's end game is just one of them. we've got the overvalues, the stocks that investors love no matter what because they have so much growth. facebook, alphabet, amazon. they come to mind because these are regarded as category killers. if content is king, all three of the kind of content that you can't get enough of with supplier and user generated free content or content that the advertisers pay for you to list, that doubles as a magnet for that advertising spending. none of the networks offers that kind of product. so facebook, alphabet, and amazon lived a charmed existence and get bought on every dip or frankly on every advance like they did today. finally there are the companies with stocks that generally have to suffer through the hazards of being enterprises that are being valued off what the fed says, the direction of interest rates, price of oil. think companies like vf corp. and kimberly corp., which reported disappointing results today and got crushed. vf, the apparel company, guided down sharply and showed weakness on almost every line but especially north face and jeans. the former may have been hurt by
6:05 pm
warm weather, but maybe the brand has peaked. as for jeans, we recently had levis on and we speak to pvh. i think vf lost a step to the competition. its stock dropped almost 3% today. the main culprit, as they said, was the economy. you think they're worried about the economy at facebook? how about kimberly-clark? that was a downer of a call with weakness pretty much across the board. it was nasty. very little growth in any business. the organic growth numbers were flat. the ceo told us the numbers, quote, reflected a more challenging economic environment. there it is again, the environment. we just don't tend to think that can be a problem when you're selling kleenex and diapers, right? those are steady eddies. no, the economy played a role. that slow and steady stock gave you a drop of just monument al proportions today. that caused the market to re-evaluate the stock of pepsico, the large cap consumer packaged goods company with the best actual top and bottom line numbers as well as some very
6:06 pm
strong organic growth. that's how pepsi could rally 2 bucks on a day that kimberly-clark went down 5%. i think it's not done going higher. there are other companies that might get reval ued up on a different day. if at&t hadn't agreed to buy time warner, we probably would have been talking about how t-mobile totally crushed at&t and verizon regardless of the environment. as one of the most aggressive competitors of our time, the ceo said on his conference call, and i quote, we delivered the best results in the industry again, and we beat the competition in key met ricks such as net post paid phone customer additions, prepaid additions, service revenue, percentage growth just to make a few. in other words, t-mobile took no prisoners, including those of verizon and at&t. we wonder why at&t had to go big. otherwise, it had to go home. on days like today, the market does seem a little unfair to me.
6:07 pm
a fine executive like jeff buk us shouldn't have to wait for years before the value of his company is recognized on wall street. but then you see a guy like l lezure. here's the bottom line, it's a panoply, an upsetting one at times but we're stuck with it. rather than denigrating this market, i think today was a lesson in patience. those who waited were rewarded big except if they backed the most impatient t-mobile, where the future is now, and no waiting was necessary. chris in california. chris. >> caller: hey, jim. how are you? >> i am good, krisz. how about you? >> caller: i'm good, thanks. i have kind of a two-part question for you. >> two-part. >> caller: one is would you recommend buying viacom right now. and, two, in the merger with cbs goes through do you think that will provide value for the
6:08 pm
current shareholders. >> on "mad money" we never recommend a stock on a fundamenttakeover basis. we do like cbs very much. we like less moonves very much much, and i think there will be no deal for viacom unless cbs thought its stock would go higher. ruth in washington, ruth. >> caller: hello, jim. how are you? >> i am great. how about you, ruth? >> caller: great. i want to thank you so much first of all for educating and helping the small investor like myself. >> well, thank you, ruth. that's the goal. >> caller: you have helped me so much. thank you. >> thank you. >> caller: i have a question about the athletic sector. >> okay. >> caller: i own nike, which is down a little more than 16% year-to-date, but i'm now looking at foot locker, where i see upside movement and actually, today, it almost reached its 52-week high.
6:09 pm
>> we have been pushing foot locker endlessly in the show. we wanted to have some exposure into the resurgent adidas. you get it all with foot locker. that's why i think that one goes even higher. today is prove that while val lieu isn't always recognized, if you're willing to wait, as is the case with t-mobile, you can be rewarded. on "mad money" tonight, super man, bugs bunny, and wolf blitzer could soon have a new corporate home. wondering what it means for your portfolio? i'm diving deep into the time warner/at&t deal. then smile for the camera. with over 1 million selfies taken globally each day, i'm focusing on stocks that could make you look picture perfect. @isn't the or i'm revealing the smarter acquirer on wall street. so just stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question?
6:10 pm
tweet cramer, #madtweets. send jim an e-mail to mad money@cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.
6:11 pm
what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley woman: how do we protect them
6:12 pm
from $4 billion in new cuts to california schools? man: vote yes on proposition 55. woman: prop 55 doesn't raise taxes on anyone. man: not on working californians, not small businesses. no one. woman: instead, prop 55 simply maintains the current tax rate on the wealthiest californians. man: so those who can most afford it continue paying their fair share... woman: ...to prevent new education cuts... man: ...and keep improving california's schools. woman: vote yes on prop 55 to help our children thrive. woman: vote yes on prop 55 and i am a senior public safety my namspecialist for pg&e. my job is to help educate our first responders on how to deal with natural gas and electric emergencies. everyday when we go to work we want everyone to work safely and come home safely. i live right here in auburn, i absolutely love this community. once i moved here i didn't want to live anywhere else. i love that people in this community are willing to come together to make a difference for other people's lives. together, we're building a better california.
6:13 pm
at&t sure doesn't like being at&t. that's the first thing i thought of when i saw the company paying $85 billion to buy time warner after shelling out $67 billion, including debt, to snap up directv just two years ago. can one company really spend $152 billion on deals in two years unless they believe their core business might be going away? it sure seems to smack of an existential crisis, doesn't it? maybe the result of t-mobile and sprint taking away cell phone customers while facebook and google have targeted advertising dollars from their tv offerings. let me just say the regulators are in no mood for this deal to happen, and once again like so many advisors to acquirers, at&t's lawyers aring looing at this transaction through the textbooks, which suggests it should sell through because
6:14 pm
there's no overlap between the companies. but you know what? that's not what they're looking at. the regulators are looking at it through the lens of politics, maybe the politics of something that could cause your already high phone bill to go higher. it's easy to make the political case that this could hurt americans, and the concessions at&t would need to make to get the deal dpun would probably be pretty unpalate to both. hasn't that been the pattern? we've had an incredibly activist justice department here. the acquirer gets advised, though, that there's no real issues because traditionally there might not have been. but we're in a different political environment these days, one where it's just easier for the regulators to just say no. look at what happened when lam research and kla-tencor tried to merge. the regulator put the kie bosch on that deal even though there was no overlap whatsoever. as lam's ceo told us last week, that was a puzzler. whether it's justified or not, lately americans have gotten pretty suspicious about the power of big business. in this kind of environment, the regulators have nothing to lose
6:15 pm
by blocking every deal that comes across their desk. that way no country can accuse them of being corporate stooges. but the people who advise potential acquirers don't seem to get that the old form of due process has just gone out the window. just as it did with the banks when they demanded explanations from the justice department for their multibillion dollar fines and were told tough luck. there really isn't any obvious reason to block this deal on antitrust grounds. anyone truly believe suppliers of the combined companies will get squeezed? does anyone think it will send up your cable or cell phone bill? it doesn't matter what bothers people. it's the perception that two behemoths are being allowed to combine. no wonder the stock was down today. how about what this move says about at&t? i think management liked how their stock performed after they did the directv deal, but i wonder if that stock didn't go up simply as a case of at&t paying a good dividend versus the low returns from fixed income, a comparative change.
6:16 pm
isn't that lofty dividend the real reason behind the stock's run, a run that stopped almost exactly when rates bottomed? two coincidental for this guy. this deal is a twofer along those lines. with the fed about to raise interest rates, at&t's dividend doesn't seem so enticing, hence the stock's recent decline. so why not take advantage of what the decline is saying and load up on the last of cheap debt to buy time warner before the fed makes its move. initially the price at&t is paying certainly makes you worry that the dividend is dispensable. then again, maybe at&t's management sees the writing on the wall about its own native telco industry. four energized, cutthroat players are now vying for the same subscribers with the reinv reinvig ration of sprint.
6:17 pm
t-mobile put up some extraordinary numbers today and said it's taking a ton of market share from at&t and verizon. maybe at&t believes it can take time warner and build an ecosystem that delivers great content over mobile platforms. if that ceo randall stevenson's master plan to recapture lost subscribers, he might be offering ah growth in income security that could end up being loved. i think it's a little overoptimistic. too optimistic given how little stevenson and at&t know about the content business. they said the same this morning on "squawk box." i hope buk us stays around, but he ain't, not for a while. could all this be nothing more than desperation? my colleague at the street says the price tag screams of desperation. it's just too much money for at&t to pay versus what it gets out of the time warner acquisition. now, perhaps stevenson believes the jeweled asset is hbo, which
6:18 pm
cannot offered with the nfl package from directv as a distinguishing reason to go with at&t over the other guys. that's intriguing, but i just can't see what else at&t gets here. weird sports package, a developer programming they know nothing about. they could be time shifted. how complementary is it all to the nfl ticket, which is the real asset of directv? let me ask you something. is that asset losing value along with the decline in football ratings? that's a tough sell and one of the reasons by the way nfl, when i see this every two seconds on a football game, it starts boring me and everybody else. 6-6. i think at&t looked at verizon was doing with aol and yahoo! again, believing that the stock went higher because of that asset and not interest rate comparisons. i bet they didn't want to be left behind when it comes to building, yes, an ecosystem. sure i hear people saying why not buy netflix, but time warner is cheaper on earnings.
6:19 pm
let's take the other side, and this is the positive side. jeff bewkes, the ceo of time warner, has done a remarkable job for his shareholders and deserves a tremendous amount of credit. so many had written this company off as one of the most vulnerable to a cord-cutting world. yet in the last two years he was able to show convincingly that the stock was undervalued. remember, bewkes turned down what in retrospect was exactly what he called it, a low ball bid from fox for his company a couple years back saying he could do better for shareholders than fox was willing to offer. this megadeal proves he is a man of his word. plus he's 64, so the timing is pretty perfect for him and his shareholders. i think that steehave no idea i knows what to do with his new baubl. it looks like he doesn't care. that's how much he wants an ecosystem to blunt facebook.
6:20 pm
at&t knows interest rates are going higher. it has the same kind of non-political advisors as everything else. they don't recognize the tenor of the moment any more than the other guys advising companies of all of the other challenged yields that failed. it's kind of what the heck. our core business could be going away. we could be going up against google and facebook in addition to t-mobile, verizon and sprint. why not try to get a deal done that gives us a chance to compete in the new world because it mig . there is successful press incident for this kind of vertical integration, comcast's. one that took comcast stock from 16 to 65 in just six years time. just so you know, i own stock in comcast. the regulatory issue. at&t tried to buy t-mobile and
6:21 pm
justice blocked it. i think at&t might be denied a second time because of boogieman worries about too much corporate competition concentration. in other words, that they all are getting together and therefore there's not enough companies going at it to try to keep all your bills down. frankly, that is all that matters in this populist, political environment. companies are too big, so let's stop them. let's break them up. let me give my bottom line conclusion. don't buy the stock of either at&t or time warner. get income from steadier companies. get growth from faster companies. both of these companies have taken themselves out of the running for either, and that is no place to be. much more "mad money" ahead. for get selfie sticks. don't miss mike take on the companies that could help you and your portfolio look fabulous. then from the breakfast table, they have the menu covered. and it's just another merger monday. the time warner at&t deal may face an uphill battle getting approved by i'm pointing out
6:22 pm
some m&a action that could make a bit more sense. so stick with cramer. now that fedex has helped us simplify our e-commerce, we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job.
6:23 pm
what's that supposed to mean? fedex. helping small business simplify e-commerce.
6:24 pm
♪ i always like to have a shopping list of big picture themes, stories you can fall back on in any environment because they're driven by powerful long term trends, meaning they're not hostage to the health of the global economy or whether the fed decides to raise interest rates. right now one of the biggest themes out there is hidden in plain sight. i'm talking about the rise of the selfie. did you know that roughly a million selfies get taken every day just in the 18 to 24-year-old demographic. at the moment on instagram alone, there are an astonishing 275 million posts with the #selfie. that's only counting the ones that are really tagged
6:25 pm
obviously. when kim kardashian went to mexico earlier this year, she took more than 6,000 selfies. i mean that's only one woman on one vacation although admittedly she's a true genius when it comes to self-promotion. the selfie has taken over the world of social media just as social media has taken over the, well, the world. obviously it's more than selfies. these days people love to take pictures of everything, including their food. i constantly see people taking pictures of their food. they can digitally document their lives online. it's like the old riddle. if the tree falls in the wood and there's no one there to post a photo of it on twitter or instagram, does it make a sound? everybody knows that facebook is the huge beneficiary here. that's why we have owned the stock forever for my charitable trust, but they're not the only winner from the selfie revolution. i want to give you some additional ways to play this theme because it's just so huge. in a world where nearly everyone carries a smartphone with a high-definition digital camera, you need to expend some extra
6:26 pm
effort in order to look your best. you don't want to go outside with your ugly face on and get caught in a drive-by selfie like i did today on the subway. it finds its way on the web, although of course i posted it. that's why tonight i'm rolling out cramer's selfie kit, the group of companies that help you look your best so you don't need to be terrified when your image winds up on social media. the truth is vanity has always been a kind of theme you can bank on. but thanks to technology, it's gone into overdrive. so aside from social media companies themselves, who else profits from the selfie culture and can we make money now on them, or maybe we got to wait a little bit? a lot of these you've got to wait. one is allergan, the pharmaceutical colossus, another stock we own for the charitable trust. why does it belong in the selfie kit? they pro-vid a huge assortment of products designed to make your face look as beautiful and unblemished as possible and of course younger than you are. they're the world leader in
6:27 pm
aesthetic medicine, the company behind botox, although it turns out botox has some legitimate medical uses as a treatment for migraines and overactive bladder. they sell an injectable gel that can add volume to parts of your vice. there's kie bella, a drug allergan acquired last year, which is the only nonsurgical option for getting rid of a double chin. let's not forget la tees. i see that box at home, and it's not mine. oh, and beyond these pure aesthetic -- she doesn't watch the show. i'm okay. allergan also has some major dermatological franchise, with a number of compounds that fight acne in a world where the selfie reigns supreme. allergan have plenty of drugs designed to deal with real medical conditions including a huge a area division, but with a smartphone camera in every pocket, i think the aesthetic
6:28 pm
part of the business has a tail wind. the stock has been put through the meat grinder. aller began got crushed when the obama administration made them tear up their merger agreement with pfizer. under the leadership of ceo brent saundsaunders, allergan ht a terrific pipeline and let's not forget they were paid 40 billion in cash and stock for their slow growing generic drug business back in august. what a great sale. with the strok currently trading at 13.5 times next year's earnings estimates, but as we told subscribers to action alerts, you might get a chance to buy it lower as election day approaches. this stock is under severe pressure right now. it's trading like value for heaven's sake. remember the tina turner theory. we don't need another hero because buying allergan right here is heroic. who else is in our selfie kit? to take a really good selfie,
6:29 pm
you need a good smile, and unless you were born with perfect teeth, you might need some help from align technology. the maker of invisalign, the system of clear removal liners that can straighten your teeth without the need for hideous braces. invisalign has been around since 1998 but they've still got an enormous growth opportunity. now, align technology is far from undiscovered. the stock is up 36% year-to-date. not cheap. this is a powerful secular growth story. 26% long term growth rate. the valuation is justified. the last six weeks, the stock has pulled back more than 7 bucks from its highs because of some displaced worries about the strength of the dental market. i think that will be corrected when the line reports in a couple weeks. we just had ceo joe hogan on the show. stock's down four bucks from when he was here. next up, i want you to keep an eye on elf beauty which came public a little over a month ago. elf, which stands for eyes,
6:30 pm
lips, face, is all about selling high-quality cosmetics at bargain basement prices. companies started out selling products on onlines and although they've expanded to bricks and mortar retailers, they still use the web to keep track of what their customers want. my take, i like the concept. however, i think you can get it for less if you wait for a pullback as the growth seems to be decelerating a tad. i say put elf beauty on your shopping list, though, and wait for it to come lower because it is indeed about selfies. anyway, speaking of beauty plays that are worth buying into weakness, let's not forget about ulta. ulta salon, the largest cosmetics retailers in the u.s. with 928 stores in the salon services ticker that helps to immunize it against online competition. ulta may be the best performing retailer out there. last time it reported, the
6:31 pm
company delivered, but if you remember, ulta stock got slammed the last time it reported because it only posted a small beat when wall street had come to expect so much more, that the company would always shoot the lights out. you know i'm a big fan. we had the ceo on recently. the stock was up more than 20 points but it's working its way down. i like it. oh, and estee lauder should be working here too but it's missed the quarter several times in a row. it's in the earnings dog house even as i have to admit it's the blue chip of the selfie lot. with the rise of the selfie, people have never been under more pressure to look their best, which is why it's worth investing in the companies that help with your appearance. and that's, again, among the reasons why i like allergan. remember, don't be a hero. align technologies. ulta salon. and why i'm keeping an eye on e.l.f. beauty, in case of a b l pullback as a pure play on the
6:32 pm
selfie generation. david in florida, david. >> caller: how are, you jim? greetings from the dolphin fans down here. >> your guys got 200 yards running back-to-back. there's only been a handful of guys who have done that. i don't have them. go ahead. >> caller: i wanted to ask you about mobileye and all the volume at this time it experienced over the last year. >> you know, i was going back and forth. i think mobileye had this tussle with tesla, and it really hasn't sorted out yet. i think that until we get more clarity about what happened, mobileye, which is a very good company, has a stock that's just frankly too speculative for me. but i like the thought. ann marie in new york. ann marie. >> caller: oh, my god, jim, i'm so glad to talk to you tonight. >> same. >> caller: now i understand why you call it "mad money," and i'm in the process of moving some of my money over to an index fund. i'm calling about skechers.
6:33 pm
i listened to the conference call, and the only thing i figure out is their domestic comps are down, and they keep blabbing about all this international growth, but the market doesn't seem to like it. i don't want to panic and sell, but what do i do? >> at this point, it is -- this is a really hard call because i think the stock's going to go down between year and year end. now on tax loss selling. but i just think that you give up on the stock in the teens is really selling short those two gentlemen who run the company, and i'm not willing to do that. look, you'll probably never take a selfie as good as mine. you remember that classic? look, you could beat that, though. you can still invest in the trend of allergan, align technology, ulta salon, all benefiting from the self-aggrandizing photographic focus. and look at elf, beauty on a pullback. much more "mad money" ahead including my take on the one food company that seems to know how to do acquisitions that send the stock higher.
6:34 pm
here's my hint. it's a pickle producer, and i think it could continue to look appetizing. then time warner and at&t may be the deal that's making headlines. i'm eyeing other mergers in this market that could make more sense. and all your calls rapid fire on tonight's special edition of the lightning round.
6:35 pm
will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com.
6:36 pm
6:37 pm
lately it's gotten very difficult to invest in the supermarket and packaged food companies because the group has been hammered by food deflation. meanwhile the restaurants aren't any picnic either as more and more consumers decide to eat at home. sonic with some bad numbers this evening. however, there's a handful of food related stocks that have been working. last week i pointed out mccormick, the spice company. tonight i've got another one for you. i'm talking about one we haven't talked about in ages, b & g foods, the house of packaged food brands that's been steadily growing its business via a series of smart acquisitions. with a stock that's up nearly 40% year-to-date, that's dramatically outperforming the s&p 500. you might recognize them as the company behind cream of wheat
6:38 pm
or, vermont made, the syrup, the pickles, pirate's booty, what a hit that is. green giant, the frozen vegetables. all of that just begs the question. how is this company managed to make investors feel enthusiastic about the prospects of a food company at a time when so many other food plays are in the dog house? and more important, can the company sustain this outperformance going forward? first you have to understand that b & g. foods wasn't always a spectacular outperformer. it began to lag behind the averages. for example, while b & g rallied nearly 20% in 2013, s&p gained almost 30%. that marked an intermediate term peak because b & g actually lost 11.8%. then in the first half of 2015, it shed another 5%. s&p was basically flat.
6:39 pm
two years, it seemed like b & g food had lost its way after a very big run. the company's growth was disappearing. in 2013, they managed to deliver 14.4 sales growth bolstered by a number of key acquisitions. old london snacks in september 2012. then they snapped up true nut clusters. then that july, the company purchased the pirate's booty -- the pirate's brand, actually. that's a wildly popular item. they got this for $195 million. the deal really ignited sales growth. you see, once the company anniversaried those numbers, its growth began to decline. first shrinking to the low teens in the second half of 2014. then it just fell off a cliff in 2015. by the second quarter of 20 15rks b and g actually saw its sales shrink by 4.6%. then b and g foods got its groove back. from august of last year through today, the stock had rallied an
6:40 pm
aunder . buying high quality but neglected brands because they're old-fashioned. then they breathe new life into them. a little over a year ago, in a genius move for both companies, b & g foods told us it was buying green giant and lieu ser brands, leaders in frozen and canned vegetable space. they bought it from general mills in a transformational deals. at the same time, management said that the acquisition would be immediately additive to the company's earnings per share and free cash flow. in addition to providing a big boost, it gave them a beach head in the frozen food aisle. that's why the stock shot up 10% the day the news broke. you can understand why. the green giant deal immediately restored b & g to growth mode.
6:41 pm
this acquisition has been even better for the company's bottom line, fueling a pair of monster earnings beats in the two most recent quarters. hmm, but like the pirate's booty situation, here's the rub. b & g reports again on thursday, and this will be the fourth and, yes, the final quarter before the company laps the green giant deal, which means that going forward, the growth is likely to be, well, at least to look a lot less impressive. remember, b & g stock starts to lose its luster. they announced another major acquisition last month. we love the spices and seasoning business like mccormick. this was their first deal since the green giant transaction. can this acquisition give them the fuel they need to keep producing some impressive growth results? b and g says the purchase will bhoo boost their sales while boosting the company's earnings by an 11% increase. even better, the ach spices and
6:42 pm
seasonings deal com plenplement existing business. as i mentioned last week when i recommended mccormick, spices are one of the areas you can bank on in this environment where so many more people are deciding to cook at home. remember, we've got that whole home thesis. in short, i'm actually not too worried about b and g's growth flat lining because the company has found its next source of growth. there's one other thing i find exciting. it's not that they just acquire these neglected brands and get them back in shape, which they do. it's also how they do it. it's very conservative. in order to do these deals, they are regularly raise money for itself through secondary earnings, and these secondaries tend to be very well received. it's actually primary stock that they're selling to you to finance the deal. in august the company sold 3.75 million shares at 49 bucks. that's a 4% discount to where it was trading the day before. while b and g still hasn't caught up to its previous highs, the stock is currently trading
6:43 pm
at 48. these deals turned out to be very lucrative long term. back in march, the company raided $152 million, and in m may -- if you got in on those deals, well, the one of may of last year, you got 57%. and if you bought the second one, well, you'd be up 43%. 43% since march. given b and g's long term track record, i bet their $49 secondary from august will turn out to be profitable for investors too now that they've put that money to work by snapping up that ach spice business. what about the stock? slight premium to the overall market. when you consider the robust growth rate, i have to believe b and g deserves to trade at a premium to the averages. plus they're paying you to wait for the ach spices deal to pay off. a bountiful 3.5% dividend yield. let me give you the bottom line. if you're looking for a safe
6:44 pm
growth investment in the beleaguered food space, you ought to consider b and g foods. it could be the way to go although the stock needs to come back a bit to entice given the weakness in most of the other packaged goods play out there. i say wait and see how the quarter goes. given the hatred aimed at this group. do some acquisitions to spur growth. spruce the brands up a little bit, and then have the stock market pay for them like b & g does. that's what works in a growth-challenged group where only a few are willing to meet or exceed that challenge.
6:45 pm
speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. we're drowning in information.
6:46 pm
where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle. and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars.
6:47 pm
>> announcer: lightning round is sponsored by td ameritrade. >> it is time! it's time for the lightning round! that's where i take your calls rapid fire. you tell me the stock. i tell you to buy, buy, buy or sell, sell, sell. we'll play this sound -- [ buzzer ] -- and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." let's start with chip in maryland, chip. >> caller: yes, sir. mr. cramer, thanks for taking my call. >> of course.
6:48 pm
>> caller: i would like your opinion on mgm resorts international. >> fabulous ceo. we've been behind him ever since he started there. we also like the real estate investment. ted in georgia, ted. >> caller: hey, mr. cramer. i'm curious about teledoc. >> stay curious but don't pull the trigger. ? why? there's too much competition. how about astor in california, astor? >> caller: how are you? >> i'm good. >> caller: i wanted info on two questions. is it too high to buy ab acetic? >> humanization one of the great stories of all time. a dex remains the best of it. george in new york. george. >> caller: cramer. >> yeah. >> caller: ete. >> no. the only one we're going to like in that group other than -- we like magellan, but we also like interproduct partners. let's go to harry in new jersey, harry. >> caller: yeah.
6:49 pm
jim, king, hsc. >> i'm not a big of the refiners as so many others are. i'm saying stay away. i think it's too much of a commodity right now. lindsay in nevada, lindsey. >> caller: baba booyah from neva nevada. i got a bunch of alcoa and don't know how it will shape up. >> i want you to buy more alcoa. it's at actionalertsplus.com. we own it for the trust. why? the split up is going to be good. i think that the aerospace side is not nearly as bad. they have some teething problems. i'm not concerned. mark in wisconsin, mark. >> caller: jim, my stock is bill barrett. >> no. it's a lagger. come on, man, we are much more interested in something like occidental which gives you the yield. i need to go to ron in texas. ron. >> caller: hey, jim. thanks for taking my call. >> no problem. >> caller: i just bought your book, get rich carefully. there's a lot of good insight in
6:50 pm
there. my question today is, jim, is i got some investments in ete and etp, and i'm considering selling or -- >> look, they're fine. we had an ete question earlier. etp is okay. my problem is i want more responsible management, which is why i send you to enterprise product. brody in utah, brody. >> caller: hey, cramer. >> yo. >> caller: booyah. i just want to thank you first by saying thanks for the opportunity. i'm calling from salt lake city. my stock is ssys. >> strat sift. my problem is i like the industrial 3-d, and the guy that's got the best industrial 3-d is hpq, hp inc., which i remain steadfast at the 13 level. how about ken in florida? ken. >> caller: how are, you jim? >> i'm good, ken. how about you? >> caller: very good. particularly having you to listen to me. >> thank you. >> caller: i have two stocks.
6:51 pm
i have others, but they're not a problem to me. i have g.e. since welch was ceo. >> okay. >> caller: and i've had disney world. that's the main one i'm worried about. >> g.e. i got to tell you i was not thrilled about that quarter. i think they doubled down -- no, they moved too big in oil and gas at the wrong time. plain and simple. the fact is that disney, i'm banking with iger. he's smarter than i am. he knows what to do with his company. i'm s the next 20, let's think bigger. that, ladies and gentlemen, is the conclusion of the lightning. [ buzzer ] >> announcer: the lightning round is sponsored by td ameritrade. but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim.
6:52 pm
only at td ameritrade. the es and es hybrid. it's your daily retreat. get up to $5,000 customer cash on select 2016 models. see your lexus dealer.
6:53 pm
6:54 pm
this at&t time warner deal has correctly taken center stage today because of its sheer $85 billion heft, the largest deal of the year. i know i've talked about this already, but i think that the merger's logic is questionable. and that's assuming it even manages to pass government muster. a very big assumption. it's a deal motivated by fear. at&t's fear that t-mobile and sprint are taking its core business while facebook, google and amazon are always capable of getting into the phone and content game and of course advertising in a big way with lots of free content to advertise against in a very highly personalized fashion, one that time warner nor at&t can possibly match. aside from the at&t time warner transaction, if you look at the plethora of deals from this
6:55 pm
merger monday, you see a whole ream of transactions that i think make a ton of more sense. how smart is it that rockwell collins, which makes so much flight equipment, is shelling out 6.4 billion to buy another company with terrific aircraft franchise? that's be aerospace. i've long admired them for its expertise in seating, galley equipment, and on board lavatories. there's basically a three-compa three-company. if you're a supplier of parts you need some heft to keep these companies from playing you off against your competitors. acquiring bea aerospace gives rockwell collins that heft. the company gets more diversificati diversification. plus these two enterprises are very much related to the smart plane, a growth business. it's a good deal for both the acquirer and the acquired. they can streamline their sales forces. i love it. same with this amazing deal which the toronto dominion bank
6:56 pm
to purchase scott trade for 4 billion. wi . in the dog eight dog world of brokers, ameritrade can take out a competitor, cut costs, and i bet keep a lot of the business. again, this is the kind of additive transaction that i adore as opposed to the time warner thing which is very, very abstruse. this one gives wins all along. everybody. everybody wins. what else? i know that people who own jen worth with the takeunder by the chinese company ocean wide. this cash deal is exactly double where the stock was just last summer when there were grave concerns about jen worth's balance sheet. this is an industry where so many assumptions turned out to be wrong, mainly how long people would live and the sky high cost of end of life health care. again, a good deal for shareholders and policy holders. these kinds of deals including the hoped for deal of qualcomm buying nxp semiconductors, a
6:57 pm
stock we own for my charitable trust that you can find out more about at actionalertsplus.com is another deal that makes sense. my squawk on the street colleague david faber says this deal is on track. qualcomm would be right to do the deal because it makes a huge amount of sense. qualcomm is way too tied in with just cell phones. qualcomm's stock has gone higher the whole time these talks have gone on, which is a tremendous sign, one that shows you that it's another win/win scenario. the at&t time warner combination may be really flashing, but to me, it's this tidal wave of other much smaller deals that really matter to the less flashy overall coloration of today's stock market. stick with cramer.
6:58 pm
mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.
6:59 pm
i like to say there's always a bull market somewhere. i promise to try and find it just for you right here on "mad money." i'm jim cramer. see you tomorrow! lemonis: tonight on "the profit"...
7:00 pm
patrick: hi! lemonis: the owner of an l.a. clothing company is known for his witty designs. lemonis: how much longer do you think kanye sells for? patrick: until he becomes president. [ both laugh ] lemonis: but the way he runs his business is anything but funny. your liabilities exceed your assets. his limited product offering has put a crimp in sales. woman: you guys have hoodies, or no? patrick: not right now. lemonis: his struggling storefront has been a drag on earnings. patrick: this is like my office. this is like my home. dan: but it's an expensive house. lemonis: despite his family's best efforts... kelly: he's the little brother. we're always trying to take care of him. lemonis: ... he's too afraid to tackle the problems. this is reckless. if i can't force him to face up to these hard truths...

49 Views

info Stream Only

Uploaded by TV Archive on