Cramer's 'Mad Money' Recap: Negative Eurozone Vibes (Final)
By Scott Rutt - 12/08/11 - 7:31 PM EST
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NEW YORK (TheStreet
) -- "The good news appear to have run out," Jim Cramer warned his "Mad Money"
TV show viewers Thursday after disappointing news out of Europe caused an abrupt about-face in U.S. markets.
Cramer said the European Central Bank dropped the ball today, and unless something surprising happens Friday, he's going to have no choice but to raise his threat assessment of the markets to DEFCON 2.
Cramer explained that there are a lot of things the ECB could have said today, such as backstopping all sovereign debt bonds, dropping interest rates to just 0.25%, or reassuring the markets that another Lehman-style collapse is not in the cards. But Cramer said that instead the ECB once again showed us their lack of a credible plan. "This war cannot be won on a single front," said Cramer.
Cramer said with so much capital needing to be raised in the first quarter of 2012, his threat assessment will indeed be raised tomorrow unless something substantial is announced. He once again encouraged investors to sell all bank stocks and stick with only high-yielding companies, as even the end-of-year hedge fund buying will be enough to counter major bank collapses in Europe.
There were some bright spots in the market however. Cramer noted that Costco
disappointed as expected, making that stock worth buying if it gets hit again tomorrow. He said that Enterprise Product Partners
, one if his favorite master limited partnerships, issued nine million shares today, which knocked that stock down to attractive levels. Cramer also said he still likes McDonald's
, which posted great same-store sales numbers in of all places, Europe.
"We await more news from Europe," Cramer concluded, "and while the Europeans should be worried about recession and collapse, they still seem to be fighting inflation."
In the Thursday "Sell Block" segment, Cramer responded to a question he received @JimCramer
on Twitter regarding Teavana Holdings
, a stock that many liken to the next Starbucks
. After a red-hot IPO in July that soared from $17 a share to $29, shares of Teavana have fallen 40% to below their IPO price.
So is Teavana the next Starbucks? Cramer said not even close. "We've always been a nation of coffee drinkers," Cramer told viewers, but even if we were tea-drinkers it wouldn't matter, as Teavana gets only 4% of its income from serving beverages.
The majority of its earnings come from selling loose leaf tea, 56% and teapots and other merchandise, 40%. Cramer said that makes Teavana more of a specialty retailer a la Williams-Sonoma
and not another Starbucks. Cramer said that unlike Starbucks, which adopted a home-away-from-home model, Teavana stores don't even have chairs to sit down in.
Cramer said that despite catering to tea fanatics, Teavana still has a lot of competition. The company has 196 stores, but plans to hit saturation at 500 locations, leaving lots of unknowns for investors. While Teavana saw an increase of 6% in same-store sales last quarter, foot traffic was actually down, a stark contrast to the 9% increase Starbucks saw during the same period.
While shares of Teavana may seem inexpensive, Cramer said that Starbucks, which trades at 19.5 times earning with a growth rate of 17%, is the far better investment with a sustainable business model and a leader, Howard Schultz, you can trust.
Gaming Stocks Duel
Continuing with his "Tweet Like Mad" series, Cramer compared the casino stocks of Las Vegas Sands
and Wynn Resorts
to find out which is the better investment. Cramer said that while he has no doubt that Wynn Resorts is the better enterprise, with unparalleled management, at the present time Las Vegas Sands is the better stock.
When it comes to the gaming stocks, it's all about Asia, said Cramer, and in particular in China's Macao provence, the only place where gambling is legal. In the case of the Sands, nearly 75% of the company's earnings now come from Asia, with its Macao business being on fire.
In addition to the company's existing diversified portfolio of casinos, the Sands is also preparing to open a huge new project in stages over the next 15 months. Cramer said the stream of good news that will stem from these new openings will help propel the stock of Las Vegas Sands or at least stop it from falling as much as the European malaise continues.
Cramer said that the Sands and Wynn are trading at similar valuations, Wynn at 18 times earnings with a 58% growth rate and the Sands at 17 times earnings with a 53% growth rate. That said, the Sands is the better stock, as it has the most short-term catalysts ahead of it. The company also has strong prospects in Singapore, which represents 41% of company earnings, where it is one of only two companies licensed to operate in that country.
Offering Value and Growth
For his "Stocking Stuffers" segment, Cramer highlighted Tanger Factory Outlets
and sat down with Steve Tanger, the company's president and CEO. Shares of Tanger are up 38%, including dividends, since Cramer first got behind the company in March 2010 and shares currently offer a 2.9% dividend yield.
Tanger said that consumers want value and outlets are where the value is. He said that there are only 150 outlet centers in the U.S., which leaves a tremendous opportunity for for growth. Additionally, the company sees growth prospects in Canada, where it recently began operating.
When asked about the health of retailers, Tanger said that his centers are 98% occupied, most with waiting lists, and rent spreads are up 25% for the year. "We're adding new tenants and there's a lot of activity," Tanger noted about one new center in New Jersey. Also promising for the company is its Atlantic City outlet center in New Jersey. Tanger said that center is one of the highest volume centers for the company as it offers "entertainment for the non-gambling spouse."
Finally, when asked about how sales are shaping for the holiday season, Tanger noted that Black Friday weekend traffic was up 9%, which is a good sign for the holiday season. He said that Tanger remains optimistic and stores are well stocked and merchandise is well priced for those who want, or need, a bargain.
Cramer continued his recommendation of Tanger.
Cramer was bullish on Johnson & Johnson
, NovaGold Resources
, General Mills
Cramer was bearish on Lululemon Athletica
, Sara Lee
, Titan International
, Micron Technology
, Lender Processing Services
In his "No Huddle Offense" segment, Cramer opined on Jon Corzine's astonishing testimony regarding the failure of MF Global. He said that Corzine's testimony revealed tremendous bad judgement regarding his trading strategy, but unfortunately, bad judgement can be prosecuted.
More interesting however was the fact that Corzine testified at all and didn't plead the fifth. Cramer said that signals that someone internally was responsible for moving funds to save the company and Corzine did indeed have no knowledge of the details.
Cramer said the situation at MF Global was "real bad and really wrong," but it's not something that Corzine will likely go to jail for.
--Written by Scott Rutt in Washington, D.C.
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