Jim Cramer is the host of the wildly popular “Mad Money” show on CNBC. He is famous for making big bold calls, liking momentum stocks and preferring dividend yielding stocks. On his show November 17, Jim Cramer discussed several stocks. Here is a list of four of those stocks, discussed in detail:
– Questcor Pharmaceuticals (QCOR) is a rapidly growing biotech company. It specializes in drugs for the treatment of multiple sclerosis relapses, infantile spasms and various kidney disorders. Cramer is very bullish about this stock. Unlike many of the stocks Cramer recommends, QCOR has a huge P/E ratio of 50.21 and does not pay a dividend, but scraping at the surface more deeply, we can see why the stock may be underpriced. For one, its forward P/E is just 22.16. QCOR also has quarterly revenue growth of 91.30%. On Thursday night’s show, Cramer explained, “Questcor’s most recent quarter was spectacular, causing the stock to pop 20 percent on the news,” he said. “Even though the stock has run, it’s still cheap here on a growth basis, selling for 23 times earnings with a spectacular 42 percent growth rate.” QCOR closed trading Thursday at $41.22. Analysts expect the stock will hit $45.75 in the next year. Robert Rodriguez and Steven Romick’s First Pacific Advisors likes QCOR.
– Starbucks (SBUX) is a worldwide coffee and tea company that sells its products in its iconic Starbucks cafes, to restaurants and, online, to consumers. In his show Thursday night, Cramer explained SBUX with relation to one of its most frequently cited competitors – Dunkin Donuts (DNKN) – but, according to Cramer, it isn’t even a fair fight. Cramer used a analogy, explaining “Starbucks versus Dunkin is sort of like Tiananmen Square—it’s like soldiers with tanks rolling over a bunch of unarmed civilians,” where the tank is Starbucks. The issue is that the two companies have similar valuations – SBUX is trading at 1.3 times growth while DNKN is trading at 1.4 times growth – but SBUX is the better value because it has faster growth. “Starbucks wins the coffee wars hands down,” says Cramer. SBUX closed Thursday at $42.03 a share with one year expectations of 48.62, a forward P/E ratio of 19.10 and a 5 year growth estimate of 17.45%. SBUX is a favorite pick of Glenn Russell Dubin’s Highbridge Capital Management.
– Salesforce.com (CRM) is a pioneering cloud computing company. On Cramer’s show Thursday, Marc Benioff, founder, chairman and CEO of the company explained, “They’re using our products as the heart and soul of how they manage their information systems,” he said. “Instead of buying the complex hardware and software from companies like Microsoft, Oracle and SAP, you’re seeing them acquire our technology at record rates to deploy a whole new infrastructure based on the cloud.“If we were a company only focused on earnings, we would not be growing our market share and revenue, which would be the wrong thing to be doing at this time in our life cycle.” Cramer wasn’t entirely convinced. He said it is “exorbitantly priced,” trading at 71 times next year’s earnings estimates, but he allowed that the company does look strong. “Understand these are high-revenue stocks,” explained Cramer. “It’s a revenue growth story. It is not necessarily the right story for this environment, but I think it’s a fabulous growth company.” CRM has a 5 year growth estimate of 23.60% compared to industry expectations of 15.78%. CRM closed trading on Thursday at $126.09 a share. It has a one year target estimate of $153.59.
– Chart Industries (GTLS) is a company that makes equipment to liquify natural gas. Most green companies are unattractive right now because of issues with government subsidies or being too sensitive to the economy. Cramer says, “We don’t know if the government is going to support the fuel, help it, or work against it,” but “If you’re looking for a stock that works regardless of whether we use natural gas or export it and you want to be a little green … then go for GTLS.” Cramer also thinks the timing is right for GTLS. It fell roughly $5 in trading on Thursday to close at $56.88 on a one-year target estimate of $66.66 a share. Jeffrey Vinik’s Vinik Asset Management likes GTLS.