After this segment, you
can see Jim's Lightning
Round picks
here...
JJC:
I've got something for
you... I've got
something... You've never
heard of it. How would you
like to own a stock that
is geared to everything
that is working in the
stock market...
everything!...
Would you like it even
better, if the stock were
radically - if not
criminally -
undervalued?... and mostly
flying under the radar of
Wall Street?... Do I have
your attention?...
Now, how about this?...
How about if the earnings
estimates are way too low,
setting the scene for
repeated
better-than-expected
quarters...
Okay, I've got one for you
that's
better-than-expected... I
think you can find all of
this better-than-expected,
cheap,
criminally-undervalued
notions in one security...
and that security is...
This one is up a solid
17.4% since
I recommended it last
year, July 16th... The
S&P has come down 8.5%
since then... and, yet...
I knew it was good then,
okay... but what I didn't
realize, when I first
profiled this for you, was
how this company
represents the new
technology idea that I am
going to harp on. I need
to break the habits of
those old Silicon Valley
lovers...
My "new tech" companies
are industrial
manufacturers. These are
the ones that are
innovating... That's what
"old tech" used to do...
They used to innovate...
they used to solve real
problems. Not anymore...
These "new tech" companies
create solutions to the
problems of whole
countries and companies
around the world...
solutions that are in
global demand...
WGOV has "new tech"
written all over it...
WGOV makes systems that
are designed to improve
the energy efficiency and
emission control of gas
and diesel engines, along
with steam turbines and
compressors, in its
engines systems segment.
What is that about? Saving
energy. In its turbine
segment, it builds systems
that are made to improve
the energy efficiency and
emission control of
aircraft and industrial
gas turbines...
These are the solutions
we're looking for... You
find these improved
engines in commercial,
regional and military
aircraft. In fact, WGOV
has got exposure to the
Boeing 787 Dreamliner...
Obviously, even with all
that exposure, and with
all the delays in the
Dreamliner production,
WGOV still managed to beat
the Wall Street
estimates... and it did it
six straight times...
Can you imagine how much
better it will do when the
Dreamliner starts to
ramp?...
Then there's the wind
angle... And you know, on
Mad Money, we love wind...
We love it more than any
other source of renewable
energy, because it's the
cheapest source... not
just of renewable, but of
all energy.
WGOV gets wind... The
company has an electrical
power systems segment,
where it makes systems
that are designed to
improve power sensing and
electronic controls of
generator sets... and wind
turbines! You know I think
2009 is the year of the
wind... and WGOV has the
jump on it...
WGOV has been a real
forward thinker, in terms
of wind. It bought SEG, a
German designer and
manufacturer of power
generation products,
including a lot of wind,
all the way back in
October of 2006...
This is the next one...
WGOV's wind business has
been on a tear! I was
listening on the
conference call...
Management has said that
it now thinks wind power
could be a $100 million
business by the end of the
company's 2008 fiscal
year. Previous forecasts
were for $60 million...
And, in fiscal 2007, it
brought in $40 million...
This wind business looks
like it's set to grow 150%
a year... Do you think
Cisco
(CSCO)'s
got that kind of growth?
National Semiconductor (NSM)?
Analog Devices
(ADI)?...
Western Digital (WDC)?...
This growth in wind, at
WGOV, is completely
fabulous... but I expect
no less from any company
with good wind exposure.
On the conference call,
the company told us that
wind was growing - are you
ready - at "an exceptional
pace." I think that's the
understatement of the
year. Now, WGOV seems to
be doing its best to grow
the wind business too. It
added a major Chinese wind
turbine manufacturer, and
it announced plans to
build a factory in
Colorado, to make wind
turbine inverters. The big
slowdown in wind adoption,
is that we don't have
enough turbines. WGOV's
got them.
Right now, as with most
"new tech" stocks, WGOV is
being treated like a
cyclical stock... you
know, the up, down... up,
down... I think that's
just wrong.
WGOV has its hands in
every secular growth trend
we like... meaning to me,
that the numbers are way
too low... Because I think
even analysts who do cover
the stock just don't get
it...
How cheap?... How cheap is
WGOV?...
It trades at 18x forward
numbers... Wait a
second... it doesn't add
up... it doesn't add up...
In the latest quarter,
sales grew 19%... earnings
were up 48%... The
consensus long-term growth
is 12%... Again, I think
it's all based on the
erroneous premise that
this is a cyclical
company...
I regard those numbers as
next to useless... WGOV,
it knows how to deliver.
It's beaten the consensus
for six quarters,
right?... Never by less
than 4 cents a share...
This is a stock where I
think both the
price-to-earnings
multiple, and the earnings
are going up. Remember the
equation I teach... Go
into
Real Money (see his
book)... Remember, "M"
times "E"... the multiple
(i.e., the
P/E) times
the earnings equals the
stock price... So, when
both go up, the price
should increase
enormously...
I think it's conservative
to assume that assume that
WGOV will grow at 27.8%.
If I'm right, that means
we can assume, at the very
least, that it should get
a price-to-earnings
multiple of around 27.8...
Okay, do the math... do
the arithmetic... At that
multiple, this $35 stock
will become a $53 stock! A
51% gain... It could go
much higher than that, if
it beats the numbers...
which I think it
definitely will...
Now, the bottom line...
. . . .
.
The Bottom Line!:Woodward Governor Co. (WGOV)
has everything I want for
a "new tech" stock.
You know what I'm talking
about... the
Emerson Electric (EMR)s
of the world... the
Honeywell
(HON)s...
I mean, these are
companies that are
reinventing the whole
equation. It's even
cheaper than all those
"new tech" plays and,
considering how
undervalued they are,
WGOV... that's saying
something.
. . . .
.
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After this segment, you
can see Jim's Lightning
Round picks
here...
Jim's comments BEFORE the
interview:
All right, tonight, I'm
talking to you about a
real pastiche... a
veritable mosaic of a
company...
Fortune Brands (FO)...
This four parts liquor...
it's two parts faucets and
cabinets... and one part
golf balls...
The last time I featured
FO was back during the
good old days of the
housing bubble... I said I
liked it as a play on the
war between the
homebuilders... That
was back on August 2nd of
2006. The stock was
at $72.89...
Obviously... a lot has
changed since then...
You can't expect a company
that makes faucets and
cabinets to hold up that
well, when the housing
market it falling apart.
Even if, as with FO, 67%
of that business comes
from the remodeling
market... a much more
steady market than the new
market, okay... much
steadier...
Now, back on March 7th of
this year, I brought on
Bruce Carbonari, the CEO
of Fortune Brands... a
brand-new CEO... when his
company's stock had fallen
to $65.88...
My judgment was that that
was too big a decline, and
that you should buy FO, if
you thought housing would
turn around in the next
six months... Okay, it's
only been three months...
three months since I've
had Mr. Carbonari on.
But, with the stock now at
$70 and change, it's up 7%
since his last visit...
So I feel good about the
call of a buy, even though
my logic - which was that
housing had to turn -
hasn't come true yet.
A lot of the positive
action in the stock came
when FO lost to Pinnote
Picard, in a war to
acquire this... Absolut
(vodka brand)... The
stock went up six straight
points that day, March
31st, on the news it
wasn't buying Absolut...
and then, of course, the
announcement they were
taking that money -
because these guys were
very pro-shareholder...
always have been... of a
15 million share buyback,
of 10% of shares
outstanding.
Now, we come to the key
question... Do we keep
owning the stock?
The last time FO reported,
back on April 24th, it
missed the Street's
consensus numbers... but
maybe that's not the
whole, full picture...
but it missed by 3 cents.
It narrowed 2008 earnings
guidance to the lower end
of its previous range.
We knew home and hardware
would be bad, but FO
continues to cut capacity
there, and focus on the
remodeling market... To
me, it looks like the
spirits division got hit,
thanks to an inventory cut
by a distributor.
Very complicated stuff...
but let's just say it
wasn't as bad as it
looks... Despite all of
this negativity, FO still
reaffirmed its free cash
flow guidance of $760-860
million in 2008.
The stock has made money
for believers, but that
earnings report was a slap
in the face for some of
the bulls... So, to
find out to do with the
stock... and what's going
on with the company... and
to find out how the
housing market is, because
you know I think it's the
key fulcrum to everything
we talk about on the show,
I'm once again bringing on
the CEO of
Fortune Brands (FO)...
Bruce Carbonari.
Bruce, welcome back to Mad
Money...
. . . .
.
Jim's comments AFTER the
interview:
Here's my take... If we
get any sort of end to the
house price depreciation,
your stock rockets faster
than anybody else in the
game... Always
frank, always honest,
always to the point...
Thank you sir.
. . . .
.
■
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)
Go to the LIGHTNING ROUND from
tonight's show
here >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >>
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":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
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.
See more
"Cramerisms" & other
financial phrases
here >>
Helpful Websites:
See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
