Thursday, 04/10/08
Posted 04/10/08,  10:49 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Thursday, 04/10/08

  Dow Jones: 12,581    + 54
  NASDAQ:   2,351    + 29
  S&P 500:   1,360     + 6
 
 
 
 
 
First Segment
 
 
Opening Segment 1 Title: 'From Russia With Love'

'Drink It In'

.  .  .  .  .

Featured Stock(s): Central European Distribution Corp. (CEDC)

See CEDC's official website here.

See the Yahoo! Finance profile for CEDC here.



See Opening Segment 2, below...
 
After this segment, you can see Jim's Lightning Round picks here...

 

JJC:    So far, I've given you three just fantastic Russian stocks... so it's time to branch out to a new country... because the whole region is just as hot as a Stalin pipe organ...

Practically every one of these countries is experiencing rapid economic growth...  incomes are rising and people are buying more of everything...   

So, tonight, we're moving to Poland!... 

With 6% GDP growth and a new government... one that adheres strictly to the principals of governance of, by and for the corporation... that's privatizing government assets and government taxes... not to mention a currency that's become as strong as the dollar is weak, I'd rather own a bad stock of a Polish company, than a decent American one...

But which stock?...

How about a name that's so stereotypically Eastern Europe that you have to believe a lot of fund managers will buy it as a proxy for the region, when they catch onto my theme... and we are early, okay?...

I'm talking about Central European Distribution Corp. (CEDC)... 

.  .  .  .  .

It's the #1 producer of Vodka, in a country that really knows how to make vodka... Poland.

In addition to being the top importer of foreign booze, it's the top alcohol distributor in both Poland and Hungary... CEDC is more of a play on drinking in Eastern Europe.   It's a play on classier drinking in Europe, more importantly...

See, as people make more money in Poland, they upgrade from the $8... to the more expensive brands that CEDC distributes...  Think SKYE Vodka...  or, if you're a cognac man, they distribute REMY...  Brandy lover, perhaps?... They distribute St. Remy...  If you're like me, you like your scotch... CEDC is Glen Fiddich...  How about beer?... Guinness... Corona... I'm just naming the most recognizable brands that CEDC distributes... because, all told, the company distributes 900 different ones...

.  .  .  .  .

The reason to love... CEDC is that they're conquering the Russian vodka market.  They bought 85% of the company that makes the top-selling premium vodka in Russia...  It's called Parliament Vodka...  The brand is only 2% of the whole Russian vodka market, but it fits with the liquor upgrade story...

Since the Russians are capitalists now, they're practically required to buy the top brand of vodka whenever they can afford it, so that everyone around will know they've got money... Conspicuous consumption is the beating heart of capitalism... and CEDC is the booze the Russians want to conspicuously consume...

.  .  .  .  .

Best of all, we know we're getting into CEDC early...  How can I tell?...  Even though seven analysts already cover the stock, not a single one is from a major bank.  The stock has attracted zero attention from the analysts who really matter, and that's a great indicator that hardly anybody knows about it yet...

As CEDC picks up coverage from the major investment houses, this stock should go a lot higher...

.  .  .  .  .

The stock trades at just 22x expected 2009 earnings...  Don't blink... "just" is because it's a multiple that's very cheap.  This has got 24% long-term growth.  

Every one of these stocks that I've mentioned has doubled the typical growth of an American stock... sometimes tripled.   Here's the bottom line...

.  .  .  .  .

The Bottom Line!:      Central European Distribution Corp. (CEDC) is selling booze in Poland... in Russia...  in Hungary...  It's the market leader in Poland.  It's got the most prestigious brands in Russia...  but, honestly, think about it...  They're selling Russians vodka.  What more do you need to know?


[See Jim's 2nd Opening Segment stock picks below... ]

 

 

 



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



Most popular
investing books ordered:
(click any book to see at Amazon.com)

 
 
 
 
 
 
 
 

 

 

 

 

 

 

 
 

 

 


We need your help!
If you find our service valuable, your donation is critically helpful to support
our operating costs and is MUCH appreciated!
(click below to donate)

We are serving thousands of new visitors every day and our costs are growing as well.  Thank you for your support & generosity!


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
 
   
 

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)

CEDC

61.19

na

Central European Distribution Corp. (CEDC)


 

       

 


Mutual-Fund-Holdings.com
NEW RESOURCE!  See Ken Heebner's CGM Focus Fund
Top 25 holdings - The No. 3 Top-Performing Mutual Fund in 2007


 
 
Second Segment
 
 
Final Segment 1 Title: 'No Stock Left Behind'

.  .  .  .  .

Featured Stock(s): Baker Hughes Inc. (BHI)

See BHI's official website here.

See the Yahoo! Finance profile for BHI here.

 
After this segment, you can see Jim's Lightning Round picks here...

 

JJC:    I'm talking about the "Ketchup Trade"... where you take a sector that's been going higher...  You find a stock that's lagged the group... and, if you believe it can catch up with its peers, you buy it...

I love these plays, because they're a great way to take an area, where you've already made money, and do it all over again with your Ketchup stock...

In this environment, where caution is king, Ketchup Stocks are relatively safe buys, because their Ketchup status means they have relatively lower valuations than the other stocks in a hot group...  That doesn't mean they can't go lower...   It does usually mean that declines will be less frequent and slower because, on a relative basis to their cohort, they're so cheap...

My next Ketchup pick is Baker Hughes Inc. (BHI)... an oil service stock that I have not recommended on this show at all... no.   And you know I've recommended a lot of them, but not this one...  But it's time...

.  .  .  .  .

BHI has a long and proud history...  This is the company where old Howard Hughes' money came from...  but lately, that proud, high-quality history has been tarnished, and it shows in the stock.

Everybody who's watched the show more than once knows that I'm a big fan of the oil service stocks since the show started, frankly...  and since January 22nd, they've rallied terrifically in a really crummy market...

The OIL SERVICE SECTOR INDEX (^OSX) is up 18% from that date...  The
Oil Services Holders (OIH) is up 21%...  These are sector funds...

This move's been driven by an overall better environment for the sector... obviously, with oil at $110 (a barrel), right...

With drilling increasing everywhere, and with North American land drilling, which had been the albatross... the millstone, if you like... around the neck of this group, and it's no longer, okay... 

.  .  .  .  .

Now, I mean, look...  I screw up... but my endless praise of agriculture, steel, mineral and oil and gas companies has been spot on... so I have some Cramerican cred (i.e., credibility) going on here when we talk about BHI...

Unfortunately, BHI hasn't been invited to the oil service party...  Get this...  It's only up 3% since January 22nd...

That wasn't by chance.  There are good reasons why BHI has lagged behind...  It's not as good as the others...

But listen...  I also think we now have some good reasons for thinking the stock is getting better, and is ready to play catch up to the group... 

.  .  .  .  .

A stock's sector counts for 50% of its performance...  and oil service is, along with ag and minerals, one of the strongest sectors there are...  and this is the worst house in the best neighborhood...   Now, remember, the worst house in a best neighborhood... BHI... is a lot better than the best house in the worst neighborhood... say banking or brokerage.

.  .  .  .  .

There are two big-picture problems that has held this one back...

One is execution... The Street doesn't have much confidence in BHI, because it was less aggressive than its peers in penetrating foreign markets, and so it had to catch up with its peers on that front too.

Now, just so you know...  Remember, long-term Cramer recommendation and fave, Halliburton Company (HAL), at $29-30, got its act together and said that it was going to be able to change and become more international...  That was it...  HAL... Nobody liked it except for us...   Remember, we were at the University of Texas...  That stock was at $28 that day.  That was a year ago.  It's at $43.

BHI could be son of HAL...

.  .  .  .  .

Now, here's something that HAL didn't have, that BHI has though...

It's been dealing with a deferred prosecution agreement it made with the Department of Justice... relating to misconduct in Kazakhstan, under the Foreign Corrupt Practices Act.  BHI has said the agreement hurts their ability to compete internationally... because it limits the number of foreign agents they can use to facilitate their transactions.  

The agreement doesn't expire until April of next year but, as we get closer and closer to expiration, I think this issue will exert less and less downward pressure on the stock.  It's basically built into the stock...

.  .  .  .  .

Beyond this big stuff, there's the problem of BHI's last quarter... one that thoroughly under whelmed the Street.   The company's international revenue growth lagged that of its peers.   BHI said that it expects its margins for the year to be lower than it had previously forecasted.  That crushed the stock.

But, now, we've got lowered expectations.  We like that too...

Well... what is to like about BHI proper?... With this litany of negatives, why do I deem it Ketchup worthy?...

First off, BHI still has some positives going for it. It's a ROW-er... 58% of its revenues come from the rest of the world. It's now growing all over the globe, especially in Brazil and Russia, where ther