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Thursday, September 07, 2006

MAD MONEY RECAP (September 7, 2006)

In tonight's MAD MONEY with Jim Cramer, Cramer wanted to discuss opportunities in recession stocks.

Tonight Cramer was discussing being long a cereal stock like he has been saying for some time. But he is asking if you know what you own. He thinks these are good to own for the next two months.

In Kellogg (K) and General Mills (GIS): only $0.33 of each $3.00 box is the cost for the ingredients, the rest is the plastic, packaging, and shipping. He compared a $0.60 profit per $3.00 box of cereal to Exxon's $0.10 profit per $3.00 gallon. Cramer also said there is high brand loyalty in Cereals and they can even raise prices if they need to. General Mills (GIS) gets to charge more and they have a higher dividend, so Cramer likes GIS tonight better.

In a call-in from a viewer, Cramer panned united Natural Foods (UNFI), and he said to go with hain (HAIN) instead.

Cramer also wanted to review shoe companies as they are somewhat recession proof.

He discussed Crocs Inc. (CROX). He discussed "On The Money" and he said it isn't easy to decide if you Buy CROX or Sell it. He said it has a high 28% short interest as it is a battleground stock of those that love it and those hate it. He said whoever is right will make a killing. PROS: Strong brand, high presence, brand interest, now has a Disney deal for characters, has a deal w/ 70 colleges, beat earnings last quarter, Cramer thinks they can repeat that outperformance, trades at 18-times next year's earnings and under a 1.0 PEG ratio; he said there is a downside though. CONS: The knock-offs at Wal-Mart and elsewhere sell for almost $10.00 instead of $30.00 to $50.00 (even though consumer will pay up to wear the namebrand in this). He thinks Crocs will have enough brand loyalty to hold pricing power, but he thinks the company HAS to beat earnings handily next quarter or he said it will blow up faster than Tom Cruise.

In a call-in on K-Swiss (KSWS), Cramer said Vans through VF (VFC) is better. In another call Steven Madden (SHOO) Cramer said he already made his money and would stay out now.

Tonight was a painful episode to watch, so please don't shoot the messenger.

Jon C. Ogg
September 7, 2006
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