Usually, CNBC’s Jim Cramer is a big fan of corporate takeovers.
“When one company buys another, it can create so much value that you want to slap yourself in the face, wondering why the heck they didn’t merge years ago,” the “Mad Money” host said. “Then there’s the pin action: whenever you get a deal, it tends to boost the value of all stocks in the same sector, which in turn drives up the entire market.”
That’s why Cramer was so bullish on Hasbro’s offer to buy competing toymaker Mattel, which was reported by the Wall Street Journal over the weekend.
Not only would the deal create plenty of powerful synergies, but it would be a smart move by Hasbro, which would be taking advantage of Mattel’s declines after the Toys R Us bankruptcy, he said.
But then there’s the fallen-from-grace General Electric, a company Cramer said has “become the poster child for bad acquisitions.”
In an improving economy with low unemployment and steadily rising wages, Cramer wouldn’t expect the dollar stores to be doing so well.
But as the stocks of Dollar Tree and Dollar General hover a stone’s throw away from their 52-week highs, the “Mad Money” host felt the need to investigate their atypical comeback.
“In the last few months, both Dollar Tree and Dollar General’s stocks have come roaring back. Dollar Tree’s stock’s up more than 40 percent from its summer lows. Dollar General’s gaining nearly 27 percent. Not too shabby. Those are stunning moves, but they beg the question, how did the dollar stores get their groove back in a stronger economy?” Cramer said.
To understand their recent highs, Cramer backtracked to their lows.
When Cramer listened to Macy’s and J.C. Penney’s conference calls after the department store chains reported earnings, he wanted nothing more than to root for them.
He wanted to hear that holiday sales would be so good that they would bring the retailers’ stocks back to their heydays, when Macy’s traded in the $70s and J.C. Penney’s in the mid-$40s.
As of Monday’s close, Macy’s stock was $19.33 a share and J.C. Penney’s stock was at $2.95 a share.
“Instead, we heard the same kind of tale of woe, the struggling stories, the same defensive nature, with the only twist being a better control of inventory and a sense that they can continue to plod along,” the “Mad Money” host said.
If there’s one company that knows the smell of success, it’s International Flavors & Fragrances, now led by chairman and CEO Andreas Fibig.
And there are a few main drivers of the decades-old company’s winning track record, which has hardly stemmed in recent years, Fibig told Cramer on Monday.
“There are two secrets, I would say. One is differentiations through technology,” the CEO said.
Fibig cited IFF’s recent acquisition of PowderPure, a company that has developed a way to make fresh, natural ingredients into powder for flavoring or coloring foods.
“Differentiation is key. And the second thing is, what we have discovered over the last couple of years [is] that many of our smaller customers are actually much more dynamic in the market than the bigger ones,” Fibig said.
Localizing business has been the key to IFF’s global success, the CEO said, as IFF develops specific products for different markets at 34 creative centers around the world.
But success often comes paired with challenges, as told by Phil Hawkins, president and CEO of DCT Industrial Trust, a real estate investment trust dealing chiefly in e-commerce distribution centers.
Hawkins told Cramer on Monday that one major challenge is zoning, which has an effect on where his REIT is allowed to build. Lots of areas don’t want distribution centers nearby because of noise, so Hawkins said DCT often chooses to abandoned or under-utilized malls or areas with environmental issues to revamp.
Another challenge has been brought on by increased automation, the CEO said.
“Automation is, perhaps, a key to productivity. The challenge our customers have is more [about] people than real estate. Truck drivers. People in the warehouses. While there may be a lot of automation, they need a lot of people to get those parcels out to the consumer. Staffing right now is a big challenge,” Hawkins told Cramer. “Finding those people is the biggest challenge all of us have, even our company.”
In Cramer’s lightning round, he rattled off his take on some callers’ favorite stocks:
LogMeIn Inc.: “It’s valued at some outrageous level for connectivity. I’ve got to tell you, I’m taking a pass on it up here. I don’t know, man. That seems rich.”
e.l.f. Beauty Inc.: “It had a decent quarter and nobody cared. This is what’s bothering me. That’s why I’ve been saying Estee Lauder, Estee Lauder, Estee Lauder.”
Disclosure: Cramer’s charitable trust owns shares of General Electric.
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Source: Investment Cnbc
Cramer Remix: Why Toys R Us’ bankruptcy could be a gift for Hasbro’s acquisition plans of Mattel