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Saturday, September 30, 2006

Weekend Edition: Cramer Loves DIVX

Cramer on MAD MONEY (9/26/06) Says BUY Walgreens and DivX

Tonight Cramer on MAD MONEY, Cramer wanted to note that this is a high-five type of market and we have a broad-based rally where almost everything is rallying. Cramer says the market is not done going up, and this rally is based extra because commodity prices are falling. Cramer said it is good for all companies consuming natural resources for their products. He is giving the market a Boyah Buy.

Cramer said that Walgreen's (WAG) has been condemned for the wrong reason and the jury is wrong. It is not a broken stock and is not a broken company. He calls WAG a "mom-back" buy. He says the Wal-Mart $4 generics and the lower-margins and the potential store growth slowing are worries that are wrong and overblown. It trades at 22 times next year's earnings and is growing at 16%. Cramer says the $5 stock could really be a $72 stock. Cramer shotdown the Wal-Mart program as a PR campaign and said that some of Walgreen prices are actually under that of Wal-Mart.

Cramer on a call-in said that the charts showing a breakout are right and you need to be in Tech stocks and Drug stocks as they will lead the market higher. He did say sell Barr Labs (BRL) in another call-in.

A Broken tech IPO that has been overlooked. Cramer said DivX (DIVX) was overlooked. He said it rose 17% after the IPO and you should buy this company with limit orders. He said the video compression and decompression. He said 18% of their business is with Google (GOOG). He said Google pays them a fee when people download videos. He said DIVX is sexy as there may even be a bandwidth glut. Cramer said the fundamentals and the numbers are a thing of beauty. He thinks the operating margins may be so big he wants to do a mom-back. He thinks there could be 93% gross margins in 2003. It has doubled revenues for 6-years so it has accelerated revenue growth. He even compared it by saying it could be the next Akamai (AKAM). He said it has $4 cash and no debt per share and it was overlooked. DIVX traded up 8% on this.

Jon C. Ogg

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