Friday, March 10, 2006

Mad Money Transcript -- Thursday March 9th, 2006

TV Channel 68 Thu Mar 09 23:57:31 2006

Jim: Hi, I'm jim cramer coming up is "mad money". You think the real estate market has crashed? Not in cramer's world. I've got your real estate play that the going sky high plus I've got your security play that can save you time on making fortune and you know where to put your money, I do. The countdown to "mad money" begins now. Jim: Hey, I'm cramer: Welcome to cramerica. Other people about making friends. Me I just want to make you some money because my job is not just to entertain you but to educate you so why don't you call me at stomp. -- 1-800-743-2622. Every day I read the paper. Some senator somewhere is talking about the dangers of handing over our port security to foreigners or just talking about how a dirty bomb could come in, some bad thing headed our way so I took it upon myself and found these senators an american company. California is back. You can help keep our ports safe. That's why I think you should own osi systems. Write this down, osis. Maybe you've never heard of osis. It's just a $350 million company not as well known as maybe raytheon or l-3. Those are homeland security and national defense based stocks. It also doesn't get my favorite face. But hidden beneath the facade of osi's heads care business they have the technology that I think is going to make our poerpts safe. Sure, my favorite english author joseph conrad knew london ports inside out when he wrote "chance victory and the mirror of the city" but not even conrad could imagine the threats ports face today. Osi is the answer and I think they can save the day. First let's get to health care business. The company was stolen from ge parent company of this network in that instrument aaron deal. Thanks federal antitrust law. Ge had to spin it off and now osis is practically at book value. We are always on the look out forgive aways. Now that's a boring head care business. Makes medical monitoring an anesthesia systems used in hospitals. A big deal. Well, it is a big deal because the company is doing $200 million a year in health care revenues. Now, when you consider that it's $350 million market cap and you're only paying about 1.75 times sales, it's 10% organic growth 40% operating margins and is resistant to a slow down in the economy I think you're getting pretty good book. We haven't even gotten to the juice of this story. It's the security business. This is where the I think all the upside is going to come from. [Sfx: Buy buy buy!]. Jim: How about we call it the hidden gem of osi if not the acres of diamonds that can make you some mad money! Osi has some potential to have the most complete security products on the market. I'm not knocking the flir that you might have seen me talk about the other day but I do believe that osis is positioned to make our ports safer. Talk about a hot topic. Perhaps you heard it here first on cnbc. This company offers systems to customers under rapid scan brand. I guess that's corporate for rapid scan which is exact lid what these products do. You can use rapid scan to inspect baggage cargo vehicles people's for weapons drugs an explosives that you got to believe are coming our way. We are talking about dual energy x-rays. This is rather high-tech stuff. On the baggage side the congressional budget office just announce owed its budget information for 2007, $440 million earl marked for check bags in 2007 alone, $175 will go to equipment purchases and I think that could mean big bucks for osi. Earlier just this week osi announced a $40 million contract for manchester air fort group in the U.K. This is for a baggage screening. In other words, the technology is so promising people want to pay for it now before it's even commercially available. I call that a good housekeeping seal of approval. In the pipeline osi is working on a new set of technology called pnfa. I'm giving you much more than you need. That's host neutron analysis could be the company's ticket. Bouncing neutrons off the contents of cargo containers, reading the bounce back signal tells if you should ship it or run for the hills because there's a bomb on board. P & o yb didn't you just tell us we were going to use this? This is the kind of thing that when perfected it's going to be everywhere. The company is doing about $60 million in security business now. That could balloon on new contracts and orders from the government. Okay, I know. Osi is losing the money but I think that's only because it's spending boat loads of carbon research and development and out of this r & d could be the next big thing in homeland security so I say you ignore the losses in the near term because there should be big money to be made in the long term. J.P. Morgan just did a brilliant analysis. They did a brilliant analysis that when the s&p 500 is down, stocks rally. So if you're from that dirty pair camp this stock is even better for you. Bottom line, think osi not for health care but for contributions to making you so that I will no longer have to keep my bag on the line and miss my plane. Oh, also for homeland security and domestic safety. I had think you should buy osis. We are going to california. We are going to david. We are talking about homeland security luggage inspections abts how your play is osis. David speak to me.

>> Jim a big booyah to you from california. Jim: Oh, man I always like to start with a nice california booyah.

>> I love the show and nobody ever mentioned the radio show but it's great. Jim: Let me tell you the radio show is all over because I said I liked hansen and sure enough on the stock trading segment people were satisfying you got negative on hansen. Even I an inconsistent flip-floper felt painted into a corner by that. I like hansen. It just it tastes awful. Sorry to divert you from the issue of osi.

>> That's okay jim. Looks like osis is a pretty good national security play but I'm curious about how much their heads care segment is going to grow.

>> You know actually to be honest about it, I was quite surprised and I don't want to minimize the osi story but motel share does grow faster than this health care business. But I think as you listen and read about the company what you find is that it's got a good base in health care which then throws off the money that you need to buy the baggage handling business. Yes, their heads care business isn't growing like genentech or amgen but it's growing at a decent clip. It's not a reason to not like the stock. We go to kentucky and speak to wendell how homeland security luggage inspection are lead to go buys of osis. Wendell.

>> Big fan. Jim: I appreciate that. Thank you. Always have time to say thank you on "mad money" by the way.

>> From a pure play how about asei? With their technology back scatter that is amazing. They can see anything anywhere in your luggage in your cargo in your ships through the airports through your mail. This stuff is incredible. Jim: You are right. I have stayed away from that stock and I'll tell you why. This is a good moment just to talk to you about the thesis of "mad money". I know that the old american science engineering which I used to visit in cambridge when I went to school up there. I know that that is the play in baggage screening as it has been literally for 20 years. I'm trying to find something people don't know. Now you could say jim why not go with best of breed. My take is this: There's a lot of money being spent in this business. It's not just going to go to american science and engineering. There's so much money that there's room for flir, there's room for osis and there's room for asei. So don't just focus on that one. Fred in connecticut. Fred, we are talking about home security and why I think that your play should be osis. What's happening?

>> Meg had a booyah skeedaddy. Jim: Booyah back at you.

>> I'm curious how lerj leveraged is the osi stock from the dubai controversy. We need guidance from cramer. Jim: I got to tell you, this is a controversy in the end. That just killed the market the second half of the day and that was entirely because I think the pet row dollars are going to say buy U.S. We might as well go to japan or europe but I think in the end these situations will all be settled by technology. I think that what you can do is make every port technologically superior to the rest of the world so we can stop it no matter who is running the port. The bottom line is osi like fluor like asei these are excellent ways to make money off homeland security. Jim: Opened up the "washington post" this morning. Lead story, run the front page right hand corner, U.S. Cigarette consumption declined 4.% In 2005. Its lowest level since 1951. About 380 million coffin nails were sold each year but the current population in this country is twice as high as 53 years ago. Wait you ask. Doesn't cramer always talk about how www.Actionalertsplus.Com his charitable trust owns altria? This news can't bode well for their sales but I'm here to tell you tonight this trend is not bad news, but good news for the stock of altria. The old floms -- philip morris. I'm not a fan of cigarettes. I don't smoke them. That said, I won't let that stop me from making money with altria. I've always said buy altria, make some money in the stock, collect the 80 cent quarterly dividend with a 4.4% yield and donate 10% of your profits to anti-smoking organizations. This is not a political show. Now, remember the government, they don't allow these guys to advertise so altria should actually gain market share in this environment because it's it's almost impossible to introduce a new brand. Each state has a formula that calculates how much tobacco companies must pay of the industry settlement. But those formulas were based on higher historical smoking rates so I think we will also see these payments coming down in the coming quarter. When expenses are lower than expected, you know what it leads to? Bte, better than expected earnings, which is obviously good news for investors. The help fears about smoking have been known for years now but that alone has not bun never to curb tobacco usage rate. The fact is nicotine is addictive and cigarettes are one of the textbook economic examples of price in last 'tisty. That's jibberish for how many fewer you'll buy when the price goes up. Public advertising is always been blocked and thankfully a big part of the recent drop in cigarette usage has been tied to lower youth smoking rates. If you combine that with the fact that taxes have driven up the price of smokes $8 a pack in new york city, no bargain no matter how much your body craves it not when gasoline is $2.50 a gallon and utility bills steadily rising. Also there'sw|hz the fact you can hardly smoke in public places anymore even outdoors. The bottom line, smoking rates are declining absolutely. That much is true, but that been doesn't mean making money in tobacco is over. Oh, no. You buy mo and just watch the share gains turn into stock gains and their expenses go down because of the soon to be more benevolent settlement. Mark in illinois we are talking about how not to give up on altria even though it seems people are giving up on smoke.

>> Booyah cramer.

>> Booyah.

>> Hey, I hear you. I have a concern. The who committed to banning tobacco sales worldwide government recognizing tobacco revenues are going down compared to head could. How much room for growth is there for philip morris internationally. Jim: I was shocked and concerned that spain has made it tougher, ireland has made it tougher france germany has made it tougher so you have most of europe duties tingtly in bear camp for tobacco and we know when altria is broken up into three parts it's ghost philip morris international, domestic and kraft. You know who is picking up the slack? Asia. The rules there are simple. Everybody can smoke. Everybody can drink. So I know that it doesn't help the case for altria international that europe has been tough but I think we make it up in asia mark in michigan. We are talking about how not to quit on altria even as you should quit smoking. Mark hit me.

>> Booyah jim and a warm greeting from michigan. Jim: Oh, man how are you doing sport?

>> I'm doing excellent. Is this the time frame of the spinoff of kraft from altria and is $105 realistic or wishful think something. Jim: I think that's a realistic price level. The stock is substantially below that. What is the problem? Why haven't they broken the company up yet? Because they have said over and over again that they can't break it up until the last two court suits, florida and the justice department, are figured out. They don't want to put a situation where they have to undo anything. So we are all waiting and waiting and waiting. But let me tell you the truth. When they're paying you 4.4%, I call that waiting profitable. Joe in the disturb state of florida we are talking about not giving up on altria even though we are giving up on smoking. Joe hit me.

>> Booyah jim. Jim: Oh, man a familial booyah.

>> A proposed amendment mandates the that the state spends 15% of the tobacco settlement. This will come to $54 million a year annually. How would this campaign affect the stock price of altria and what would be the effect on the price if the movement spreads to other states? Jim: Okay. I want to make things clear. There will be some states that will come up with something that's different from the master settlement. The florida sounds interesting to me but I really want to focus on the notion that the master settlement is so beneficial now that smoking has come down I think I will will override your concerns. Remember this is a breakup story. It just got better because of the changing formula. The bottom line is altria is for you. After the break I'll try to make you even more money. Jim: It is time for the "lightning round" on "mad money". Unfamiliar with the process? I take calls. Some would say rapid fire. You say the name of a stock. You don't go on for too long because then I grab my pillow and take a little nap. I tell you whether to buy or sell it and just to be clear, I don't know the callers or their stock questions ahead of time. Ample opportunity for me to try to noodle on it. My staff prepares the graphics on the fly. We play until you hear this sound and then somehow we continue to play because I am one gre gairs fellow. This reminds knee the dubai port deal is sucking the life out of this market either way. All I have to say is are you ready skeedaddy? It's the "lightning round" on cramer's "mad money". Why don't we start with R.J. In new york.

>> How you doing, I love your show. I need a little help here. Jim: Fire away. You came to the help desk.

>> Semiconductor stocks that you recommended btss I got calls on that. I'm waiting for it to go up. Jim: You bought calls on a $3 stock? My man you're not playing with a full deck. A $3 stock is an option. I don't condone that. I think you should sell that. How about we go to doug in pennsylvania.

>> Cramer, booyah skeedaddy. Jim: Excellent booyah skeedaddy back at you.

>> I love the book. Jim: The book holy cow. I bet you're speaking about jim cramer's real money sane investing in an insane world.

>> Okay. Just wanted to ask you, xto energy. Jim: Man you got one problem stock there. May I tell you I used to own that for the charitable trust www.Actionalertsplus.Com and gave up on it because as oil ramped from 30 to almost $70 a barrel that sucker couldn't move an inch. It's been glued to the 40 level and I see no chance for it to do anything else other than flatline or go down.

[Sfx: Voice "sell sell sell!]. Phillip in texas. Phillip.

>> How's it going? Jim: Huh?

>> Hello. Jim: Speak to me.

>> How's it going? Jim: Not bad. Thanks for asking. How you?

>> Pretty good. Jim: Jam day. Nothing we can't handle.

>> Right right right. My question is adu. With the budget for biofuels what's the ceiling for the winning ethanol play? Jim: Look, the pacific is a little speculative. What's been happening in this market is they've been taking the speculative stock and making it jump out the window, but that doesn't mean that archer daniels necessarily is my favorite. When jimmy cracked corn and I did care the stock was at 22. Now it's at 32. I think bulls make money bears make money and hogs get made into jimmy dean sausage. By the way 4% yield two thumbs up for sara lee. I guess we call that a twofer. Chantal.

>> Beautiful from grass valley. I love your book too. Jim: Holy cow. That is unsolicited praise. Wasn't to know how you feel about rnai. Jim: That's like a weird little betech company you're coming to me with. Therapeutic nucleic acid? I'm going to issue a rare pass on that one because without knowing where it is in the food chain I have to put a don't buy and find out more later. Let's go to wilkin in louisiana.

>> How are you doing jim? A big booyah from the bayou state of louisiana. Jim: Booyah back at you.

>> I love the book. Jim: People must be into this bestseller I've got. What's on your mind?

>> Research in motion, now that it settled the patent suit is it buy sell or hold? Jim: I'm glad you gave that option because I'm putting a sell on research in motion. I think that palm is the better and may I think will "slim" gabrielski for that pick because he's behind it with everything he has.

>> How are you doing? Jim: Not bad.

>> I letter a lot listening to your show. I tape it every day. Jim: Thank you.

>> And I want to know about unh. Is an opportunity for a mow 'em back or do I hold it or sell? Jim: There was a time when I considered myself jim unh esquire but you know something? This stock has broken down here. Am I running from it? Am I scared of it? Absolutely not, I've been buying more for www.Actionalertsplus.Com my charitable trust and may I suggest to you that united heads group is now one of the cheapest growth stocks. It's growing at 17 percent when it sells at 19 times earnings. I regard that as a positive situation and I'm doing a mow 'em back. Larry in florida.

>> A big booyah from sunny tampa. Hey, sunshine what's shaking?

>> I with like to know, my wife and I love making money with you. Jim: You know something making money I regard it better than the move it is or a sporting event.

>> That's true. Jim: How about a to be.

>> Amcc. Jim: The other day I had to recommend amcc on this show. May I point out I'm a buyer of all the fiberoptics. Amcc is dirt cheap but it hasn't really done anything in maybe 6 years. Remember when it used to trade with my friend pnc sierra? Now I think amcc if you go to the web site or light reading.Com you will see they have a technological solution that's leapfrog the current technology and tiber optics which is why I like the stock a lot. John in new jersey, garden stater john hit me.

>> Booyah jim from the great state of new jersey. Jim: Oh, you are so right about that being a great state.

>> Congratulations on your one year anniversary. Jim: I hear the anniversary special is going to be not to be missed tv. What's on your mind?

>> Can you give me ahead up on kraem? Jim: Krispy kreme has my head shaking because we don't have any financials. We don't know how the company is doing. We just found out who is running the company. We sometime haven't found the warehouses where the 1998 donuts are stored but people are buying the stock. I issue a sell and I'm bearish on that and all other companies that don't have financials. How about we go to greg in california? Kbreg.

>> How are you doing jimmy? Jim: Not bad.

>> My dad and his friend want to give you a big insurance broker booyah. We would like to know about cmi. Jim: You know cummins is a best of breed machine company. It's got so much cooking in the diesel engine department that I have liked it. I've also liked paccar and this is one of about 3 sectors that are still working including aeo -- area oh space. I still like it. I want to be careful. If I don't be careful you'll think I'm saying.

[Sfx: Buy buy buy!] And all I'm saying is I like the stock.

>> Hello mr. Cramer. Jim: How you been?

>> All right. Jim: Give me a stock.

>> My question is on options express. Also my wife wanted me to tell you booyah and that I'm in trouble for listening to you. Jim: I don't know about that. I don't think you're in trouble. Let me understand it. I I commented positively on it yesterday but it still guest down. Maybe I'm not that powerful. Options express has been a monster good stock up up up. It is a service winner. Check my friends at barron's which awarded it that but people think we have entered into a bear market phase and you can't make money in options so people are bringing it down. I don't want to go out right now and draw a line in the sand telling you that stock is not going any lower. I can tell you it's the best at what it does, it's the best of breed and I like it for that reason. Janet in michigan. Janet.

>> Hi mr. Cramer. Edf. Jim: Hot stock. Candidly a hot stock lng with other information providers. As much as I like that let me focus on accenture. How about we go to mike in iowa. Mike.

>> Jim. Jim: Mike.

>> A big iowa booyah for you jimmy. Jim: Wow, man that's like -- what is that there, like some sort of heart thing going? What are you got?

>> Rig, where is it going? Jim: Oh, man you cut me to the quick with that. Just the other day someone was asking about nabors. Where is this vast sector called drilling going? When you look at a chart, you overlay a chart of rig over the past 5 years with with the price of oil and you will think this thing is dirt cheap. When you consider this is the only company that can drill further than 10,000 feet down. That said we should understand, oil and oil stocks have entered into a bear market mode this. One is up there along with nabors and slumberge that I like but the only one that I would abort putting capital in at this level is king hal because hal is splitting into two companies and I own that for my charitable trust. How about we go to dave in florida?

>> Cramer bah. Jim: Booyah.

>> Help me. I'm in a split level house of pain with shanda. Jim: He did an internet review of shanda. I am obviously completely and utterly wrong on that. I've had my head chopped off and you know what I do when that's the case, I bring out the post its. I'm doing the post its for shanda. How about lee in texas?

>> Booyah man I love the show. Love the book. Jim: We are going to put the post it on the book because he was wrong on shanda.

>> Give me smdi, microdevice. Should I hold it or buy more? Jim: You know something? Look at the way the game is played. They rip my head off with shanda but we put it right back on with cirenza. I was surprised how big the revenues had ramped but that's mostly because of satellite radio. I say we schnitzel a little off the table. Dave in illinois. Dave.

>> Cramer. Jim: Big peoria illinois booyah to you.

>> That's a fabulous illinois booyah. What's on your mind? Jim: Eagle materials had a choppy week. Where's it hit?

>>. Jim: Eagle materials this group has been under some pressure. This one has handled the pressure better than others. It is split. I still like the stock. It's cheap but once again I caution that we have entered into a more negative phase in this market and if you had the stock for a while you're being a little bit on the hog side. I wouldn't mind taking something off the table. Scott in north carolina, scott.

>> Booyah from greensboro, north carolina. Jim: That's a nice tar heel booyah if I ever heard one. What's up my friend.


>> I wonder what you think of lexar bought up by micron? Jim: Lexar be done. We hit that one. We recommended it on this show. Now it's become an arbitrage situation and we don't like arbitrage on this show. We ring the register. How about we go to darren in california? Darren.

>> Booyah brother jim. How are you? Jim: I'm doing fine T. Market is no. What's on your mind?

>> I'm in the house of pain. Stx. Jim: I could see how you would be in the house of pain if you picked that one up at 28 but those who bought it at 18 are in the house of pleasure. I think the quarter is going very well. Nobody cares about that anymore. Witness how they caught national semi. I think seagate should be bought here. Could we buy it in a scale not buy it all at once, recognize the fallacy of buying all at once? That's ar but I still like it. How about we go to ann in michigan.

>> Hi, jim. How are you? Booyah. Jim: What's up?

>> I was wondering what you thought about pepsi bottling group. Jim: I've never been a fan of the bottlers because I've always felt when push comes to shove [Buzz]. Jim: I always felt that these guys are mere subsidiaries and you can't beat them. Rather than be in pepsi, I recommend pep or hansen which I allegedly took down in stock trading. I was negative but not negative enough. You know what? We are not done. I think we go to vincent in ohio. Vincent.

>> Hey, jim a big buckeye booyah to you. Jim: Man what a terrific midwest booyah back at you.

>> Hey, love the book. I hope I can get an autographed copy. Jim: I think you maybe able to win that some day.

[Buzz]. Jim: They're serious now. They're coming for my neck. What's on your mind?

>> My question is in regards to kry. Will I be crying if I hold or if I sell? Jim: This is one of the new companies investible in venezuela. I am sticking by my recommendation that I think chavez is going to have to money crystal the higher people so I'm sticking with it, and you stick with cramer. Jim: Just a quick update. Therapeutics dumped knee in the loupd. They have a phase 3 drug which is when someone mention the "new york post" most people think how about page 6 but what you probably don't know is the post is a pretty darned good business section and reading it can help you make money. Just this morning terrific article by lois white widely picked up in other media about the price of office space in new york city and how it's going to double in the next 5 years. Didn't see this coming. The issue here is simple. It's one of supply and demand. Basic economics demand for office space is rising and there isn't enough supply to keep up especially in midtown. This is not the case with housing. It is the case with corporate office space. Now I know what they're think willing jim, if prices are that high with why don't people just build more office buildings? That comes under the category of thick. It isn't quick cheap or easy to add new capacity. What happens in this scenario when demand outstrips supply pretty simple, prices go up. And they go up fast. Another problem that all the commercial property developers are being out bid for new projects by guess what, the residential guys. This may seem like bad business and new york residents alike but where there is bad news for the renters an the lessees, I believe makes good news for office real estate investment trust. And the one I want you to focus on ver and oh led by ceo steve roth. These are hand picked properties. That's right. I feel like these are hand picked before the market. Vornado has manhattan space that has to be renewed and you know what? It is going to be renewed at much higher prices. Real estate investments most of these pay out heftty dividends there's been a lot of consolidation plus people feel the reach is the perfect hedge against inflation. Vornado has a 3.5% yield not quite as much as the s&p 500 stock offer. New york city is one of the most popular desirable places left to live in the country. People will spend their entire paycheck for a cubicle-size apartment. What about businesses answers corporations? Will they ship their employees across the hudson river? The answer is no. I don't want to diss my home state but new jersey is not the epicenter of the business world and that only means corporations are going to have to find the cap to afford the posh skyscrapers with the views. And bottom line, if I think you have to own vornado vno before it get to 100. Stay with cramer. Jim: I've tried to convey on this show how difficult the market has become and how even some of the leaders have been slaughtered. There are still niche companies whose stocks are doing well and one of them is gibralter industries, I like the symbol rock. It could be like the guy in the movie. Ryan is chairman and ceo of rock give me a sense of what you're doing right so that your company is doing so well.

>> Good to be on your show. Thanks for having us. Jim: My pleasure.

>> We stick to the basics and try to do them very, very well. Jim: A lot of guys make materials that go into autos. They've almost all been crushed. You've got vehicular market. Why hasn't it led to a sell-off in your company?

>> Again, we've found our whole focus has been to find niche markets where we can establish a product leadership position and once you find those your performance is going to be more consistent over the long run. Jim: Can you tell me what this -- I'm going to mispronounce it, but what the amoco acquisition did?

>> It's a great acquisition for us. It produces products that go into the industrial building products marketplace and they've got a number of product leadership positions in things like real sexy products like biograding, metal lab, structural products all those things. It takes us into a brand new market that we haven't been in before and it's a company that I think has a pretty good reputation and under gibralter we speck it to do better than it did as a stand alone company. Jim: I think it's time to play break the analyst. That's a good story. You stay with cramer. Jim: Pretty nasty out there, osi systems can bust the trend, altria safe at that 4% yield, granada I'm recommending things on yield. I always say there's a bull market somewhere. I promise to try to find it on jim cramer's Mad Money. See you tomorrow.


At 6:47 AM, John said...

Hey Brian,

I have a few questions about your closed captioning of Cramer. Would like to discuss in email, if you would write me back.


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