Monday, 01/07/08
Posted 01/07/08,  11:59 pm

(Scroll down to see Jim's comments below)

 
 
Today's date:  Monday, 01/07/08

  Dow Jones: 12,827   + 27
  NASDAQ:   2,499      - 5
  S&P 500:   1,416     + 4
 
 
 
 
 
First Segment
 
Final Segment 1 Title: 'The Aisles Have It'

.  .  .  .  .

Featured Stock(s): Chattem Inc. (CHTT)

See CHTT's website here.

Yahoo! Finance profile for CHTT here.
Google News search for CHTT news here.




2nd segment picks below...



JJC:   I've got a great defensive play that's also a takeover target, coming right from the aisles of your local drugstore... and a stock you've probably never heard of, unless you're a watcher for almost three years of Mad Money...

And the stock is...

Chattem Inc. (CHTT).

This is a little $1.5 billion number.  Very small...  A stock that is 2 points off its 52-week high, because it's recession-proof.  It's as recession-resistant as they come!...

This is small, okay?  But it's got a wealth of products... products with strong brands that I think will make a great acquisition for almost any other consumer products business out there, particularly a European company that pays with very expensive euros to buy inexpensive dollars...

Now you might not recognize the company's name, but you probably know its brands...

Icy Hot, Gold Bond, Selsun Blue, Garlique, Pamprin... Bullfrog, and my personal favorite of the bunch - just because the ads are so ridiculous and embarrassing - Herpacin L!...

When we look at a company that sells over-the-counter healthcare products, toiletries, dietary supplements and the like... we measure their success by how many feet of aisle space they take up, okay, in a CVS or a Walgreens...

CHTT's products are scattered, but they take up a lot of shelf space, and that's what big pharma wants from Europe...   Now this may be a small company, but they take up a lot of space in the drugstore...

The company has a winning model, and it's created a winning stock.  CHTT has doubled since I last recommended it a long, long time ago, on April 7th of 2006.

.  .  .  .  .

These are attractive brands for a small company, but Johnson & Johnson (JNJ) could (not) care less, right?...  And they had to sell brands to appease the regulators.  CHTT was there to pick them all up.

They've got a simple process for turning their junk brands around, and you can see how well it works just by looking at the stock's performance.

First, they boost advertising, because the company recognizes that it's all about brands, right?  Then they support the brands with a lot of ad spending...  Then CHTT likes to bring the production of many of its brands in-house, manufacturing the products themselves to boost the profit margins.

Finally, they take the brands they've supported, and extend the product lines to boost their sales and get more shelf space.  They've got nine planned brand expansions coming up in 2008. 

That's a model that's worked flawlessly, frankly.  I think it'll keep working.

.  .  .  .  .

CHTT's last quarter reported in September.  It was a genuine blowout.  They reported 84 cents of earnings per share.  The Street was looking for a paltry 74 cents.  Sales were up 51.4% year over year.  You've got to love that revenue growth.  CHTT issued upside guidance for 2008.

The question with a stock like this is, how do you value it?  How do you value all these brands?...

Well, we got a great clue for that, back on September 10th, when Adams Respiratory, the makers of Mucinex, was bought by Reckett Binkeiser (?)...  They took out Adams at a 37% premium, valuing it at 4.97x sales, and 33.9x earnings.

Oh man, what would that make for CHTT?...

It would take this $75 stock, and it would go to $84... I think, actually much higher...

Certainly, anyone who wants to buy aisle space at CVS on the cheap, should be looking to buy CHTT as an easy way to expand and win the war for inches and, of course, feet in the drugstore.

.  .  .  .  .

 

.  .  .  .  .

The Bottom Line!:    Chattem Inc. (CHTT) has been conquering the aisles at the drug store, one shelf at a time.  It's given us some big wins so far, but there is no sign that their long march through CVS (CVS*) will end anytime soon.  I call this one a super-deduper buy!

.  .  .  .  .

 

 



See all of tonight's stocks' latest quotes on Yahoo! Finance


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Stock Snapshots - Includes all stocks mentioned above

 

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)

CHTT

74.01

76.63

Chattem Inc. (CHTT)

 

       
 

 
 
Second Segment
 
Final Segment 2 Title: 'On The Line'....

CEO Interview
Peter McCausland, CEO

.  .  .  .  .

Featured Stock(s): Airgas Inc. (ARG)

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


ARG

48.67

49.38

CEO Interview
Peter McCausland, CEO
Airgas Inc. (ARG)


Jim's comments BEFORE interview:  
 
Ever since the year began, people have been taking every industrial company to the woodshed...

They're just all saying - because the Federal Reserve is reluctant to sell - that you've got to sell anything that's remotely industrial.

We have felt for some time on this show that the business of actual air - packaged air - has been a great one... air and some of the stuff you don't see, basically... And we don't think, on Mad Money, that business has slowed.

But let's ask someone who knows... who's  been a good friend to the show.   Let's bring Peter McCausland on...

.  .  .  .  .


Jim's comments AFTER interview:    
We have liked this group... we have championed this group... You've got a chance to buy this stock 8% down.  Remember what I said about that...  Quality stocks that are 8% down, that are going to be able to make the quarter... I say you pull the trigger... I would pull the trigger ARG...  


         

[ end of final segment ]

   
 

Go to the SUDDEN:DEATH SEGMENT from tonight's show here >>

See current quotes on Yahoo! Finance from tonight's show stocks here >>


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Symbol keys:

A Charitable Trust stock. - An asterisk next to a stock symbol indicates that Jim mentioned it is a stock that he manages within
his charitable trust portfolio.  You can see the complete portfolio
of stocks here >>

Thumbs up - indicates he would buy the stock or, at the very least, not sell the stock.  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Thumbs down - indicates he has said not to buy or to sell the stock, based on his comments  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Back up the truck - indicated by Jim, when he says the stock is so good, that he would do a 'mon-back' on the stock... In other words, this is the sound someone would say to a truck driver, "Come on back... " as he is "backing up the truck" to load up on his cargo.  Translation for buying stocks:  This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.

Stumped. - Of the 2,000+ stocks that Jim Cramer has in his head, for which he has an informed opinion, he sometimes comes across a caller with a stock he does not know well enough to opine on...  He then indicates he is stumped and will have to come back to it, after he does some homework of his own on the stock.  This usually occurs during the Lightning Round, when Jim does not know in advance who is calling, or what their stock question is about.
 

 
Definitions of key phrases used by Jim, known as "Cramerisms":