Cramer's Mad Money Daily Recap 8/18/05 - Google Exorcism

[Thierry Martin]

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Cramer's Mad Money Daily Recap 8/18/05

Cramer Performs a Google Exorcism

The day before the anniversary of Google's (GOOG) IPO and on the day the search giant announced a $4 billion secondary offering, Cramer performed an exorcism.

"You can't let value investors keep you from owning Google," Cramer said.

Cramer believes that Google is capable of earning $9 a share in 2007, which would justify a stock price of $630.

Yahoo! (YHOO) trades at the same P/E multiple but has a smaller growth rate.

Whole Foods (WFMI) also trades at a P/E in similar to Google's, with two-thirds the growth rate.

Cramer believes Google, which doesn't have much economic sensitivity, is worth a premium, perhaps three times its growth rate. That would equate to a price of $810.

Even if Google's growth rate slows to 25% next year and you pay a multiple of twice the growth rate and even if Google earns only $7 a share - 50 times $7 equals $350. And that is Cramer's target.

"Wherever they price this big block of stock, you, my friends, are going to make money." If it sinks below the offering price, "then you do the 'mon back."

Although the increase in the stock's float due to the secondary offering will make make it more likely to be added to the S&P 500, Cramer said "iit's not why we buy stocks." It is Google's fundamentals, he said.

Jarden could win big

Little-known Jarden (JAH), a small appliance maker whose products are sold at Wal-Mart (WMT) and Target (TGT), is in a war for retail shelf space against competitors Applica (APN) and Salton (SFP).

Applica and Salton have overextended themselves and are at risk of going bankrupt.

Cramer said. "Buy a little when it opens tomorrow. If it comes down Monday, buy a little more."

Cramer also added: "I've checked with CEO Martin Franklin, and I think the near term is quite good."

Lesson from Cramer's Mother

Cramer told a story about going to a casino with his mother 25 years ago to explain why he changed his thinking on oil stocks in the last few days.

He and his mother had won $100 on slots by 10:30 a.m., when his mother led them out of the casino. She then bought a $100 sweater she'd been eyeing, and wore the sweater for many years.

"I got a lifetime's worth of financial knowledge out of (that situation)."

"I still own some energy for my charitable trust. But, I prefer a sweater right now over staying at the slot machine."

After the Close

Marvell (MRVL) reported an "excellent" quarter after the close. Cramer said "The tech thesis is still playing out here."

Lightning Round

Bullish - Altria (MO), Amylin Pharmaceuticals (AMLN), Yahoo! (YHOO), Panera Bread (PNRA), Sprint Nextel (S), Genentech (DNA), Varian Medical Systems (VAR), Qualcomm (QCOM), Marvell Technology Group (MRVL), Broadcom (BRCM), UnitedHealth Group (UNH), WellPoint (WLP), Sherwin-Williams (SHP), Identix (IDNX), L-3 Communications (LLL), Thermo Electron (TMO), FPL Group (FPL), Ericsson (ERICY), Motorola (MOT), Nokia (NOK), Corning (GLW), Amgen (AMGN), Gilead Sciences (GILD), Biogen Idec (BIIB), NovAtel (NGPS) and Commerce Bancorp (CBH).


Bearish - Maytag (MYG), Inter-Tel (INTL), Symantec (SYMC), Salesforce.com (CRM), Knight Capital Group (NITE), Electronic Data Systems (EDS), Computer Associates (CA), Oracle (ORCL), Calpine (CPN), Myriad Genetics (MYGN), Captiva Software (CPTV), Allied Waste Industries (AW) and Eastman Kodak (EK)