After this segment, you
can see Jim's Lightning
Round picks
here...
Jim:
Yesterday, I told
you that, if you can't
eat it... can't drink
it... can't smoke it...
can't take it when
you're sick... or wash
with it... then you can
own it. These are the
stocks that I'd be
looking to buy in this,
the most horrible market
that I've ever seen...
Pretty much everything
else, unless it's got a
fat, zobtic dividend, or
a huge a huge cash hoard
almost equal to its
stock price, just ain't
working, okay...
That doesn't mean...
people say, Cramer says
sell everything... If I
say, "sell everything,"
then why am I hawking...
Hershey Co. (HSY)?...
That's right. Maybe it's
time we revisit a
company that was once
great, and could be
great again...
C'mon... a trusted brand
name?... Now that cocoa
and sugar prices have
come back down... and
that stock is
Hershey Co. (HSY)...
Now, between 2001 and
2005, this company was
en fuego...
It streamlined its
distribution centers
from 22 to 5, closed 4
manufacturing plants,
had manageable commodity
costs and, most
importantly, from
2002-2005, HSY grew its
earnings at an
outstanding 14% compound
annual growth rate.
But then this company
fell from grace...
These days of
double-digit growth are
gone now. HSY is
expected to stumble
along, growing earnings
just by 4-6%. Its
operating margins peaked
in 2006, at 20.3%... and
they're expected to
decline under 15% this
year. That's not good.
No one wants to see that
level of decline.
The company cut back on
ad spending and its
sales grew at a lowly
2.6%... I mean, that
really is a little
pathetic in 2006. I
mean, I think I ate more
chocolate that year...
maybe you did... And it
was even a more meager,
0.1% last year, down
from 4% in 2002. Now, we
know not everybody
stopped eating
chocolate! It ain't like
that. It isn't like,
when gasoline goes to
$4.50, we don't use
it... I mean, this stuff
is amazing...
The stock - if not the
candy though - did
become inedible...
Now I believe HSY could
be poised for a
comeback...
Commodity costs have
come down, especially
for HSY's most important
two inputs (i.e., raw
costs to make its
products)... sugar,
which makes up 19% of
HSY's input costs, and
cocoa, which makes up
15% of HSY's input
costs. Remember, this is
pretty simple...
Sugar futures are down
13% from their peak in
February and, more
importantly, the price
of cocoa has just
collapsed... Cocoa's
down 21% since June. I
wish HSY hadn't hedged
against its sugar and
cocoa costs. Hedges last
from 3-24 months... but
these declines in the
cost of sugar and cocoa
together are enough to
insure that I believe
that HSY's earnings will
exceed the Street's
estimates for the
foreseeable future. And,
if they can maintain
these price points...
wow.
. . . .
.
The Bottom Line!:
I think
Hershey Co. (HSY)
- which is a trusted brand name... the
kind of stock I'm recommending here in
this awful environment... one that you
can own for your 401k, for your IRA,
that you can put away for your kids...
Didn't he say to sell everything?! No...
I think the bottom line is that HSY's
years of stock purgatory are over,
because this one, at least, is coming
back. Now, just so you know, read my
lips... I am recommending a stock...
read my lips... do not sell everything.
Read my lips... I like HSY.
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After this segment, you
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Round picks
here...
Jim:
We know that
tech, as a sector, is far
from the bottom. Estimates
are too high, inventories
are too swollen, and the
economy is just heading into
recession right now. It
needs to be heading out of
one for most tech stocks to
start going higher again...
We're supposed to love
fast-growing companies here
on Mad Money, and this one's
growing at a 40% clip...
That's about the fastest
growing tech company I know.
Okay, the stock's expensive.
That didn't used to
matter... It's got a 57x
price-to-earnings multiple
for next year. Even after
being cut exactly in half,
the stock's still priced for
perfection I feel...
The company is the leader
though in software as a
service... a great and
growing business that lets
companies save on IT -
information technology -
spending, by using its
software, rather than
hardware. It's a great
business model.
I've been saying you should
sit this one out, ever since
January, when the stock was
at $54, 18 points higher
than where it is now... but
it did go up higher after I
said to sit it out...
Now, open hand... I am a
huge admirer of this company
and management...
Now, yesterday,
SAP AG (SAP)
said that its business had
gotten soft in software, so
I've got to wonder, are all
software companies created
equal?...
CRM's CEO, Marc Benioff,
is fabulous and, last
quarter, CRM grew revenues
at 49%. It raised its
full-year guidance, although
some people are unhappy,
because of some deferred
quarter-over-quarter revenue
growth that was not what was
expected...
I told you the stock's got a
little perfection thing
going... You can't say that
anymore. You can't say it's
still perfect... not after a
couple of firms downgraded
it today... and the stock
took another 11% hit...
Hey, CRM just signed its
largest platform deal ever
with Dell... It ended the
last quarter with a huge
pile of cash, which you'll
remember the best tech
players have when they
bottomed in 2003.
CRM has $823 million in
cash... $6.55 (a share) in
cash... a growth stock!
That's up 60%
year-over-year, but maybe
things are about to get
worse for CRM... We've got
to find out...
Ever since it acquired
Instranet on August 20th,
the stock's been getting
clobbered by people worried
about the dilution from the
deal... My impulse is to
say, let's just watch it.
But, you know what? There's
one guy who knows a lot more
about
Salesforce.com (CRM)...
than I do... but it is a
great pleasure to have one
of my absolute favorite CEOs
in the country, Marc
Benioff, on the show... and
it is so good to have you...
Marc, the stock and the
company are diverging,
aren't they, right here?...
. . . .
.
Jim's comments AFTER the interview:Guys look... Some companies do well
in tough times. This is one of them. Why
aren't I saying buy the stock? Because I
don't like the market. When the market
gets better, you've got to remember that
his company is a different model. It's a
model that saves companies money. It's
radically different from all the others,
it's obviously the best product... I
just can't recommend the stock because
it's too high but, when this one comes
down, I've got to tell you something...
buy, buy, buy!... because of him,
because of his product, because of the
company...
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
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price
next
day
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Name/Comments
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each)
Go to the LIGHTNING ROUND from
tonight's show
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Finance from
tonight's show stocks
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Symbol keys:
A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
of stocks
here >>
Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself.
Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
here >>
Helpful Websites:
See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
