Jim Cramer's Mad Money Review

Summary: Morgan Stanley's hyping a $150 million follow-on stock offering next week for InnerWorkings, a company whose proprietary software will supposedly revolutionize the printing industry. Since the initial August IPO, INWK has shot up 80% to a recent $16.20. With just $5.7 million in profits this year, the company's $700 million market cap gives it a whopping 125 P/E—enormous for a techno-glorified printer broker who splits the savings bullied out of printing companies with client companies. The company has tried to obscure ownership by Eric P. Lefkofsky, whose checkered past has burnt investors many times. Ex-employees say INWKs 'PPM4' software doesn't work, and that Lefkofsky and his cronies will be cashing out 6.2 million share options next week, even before the initial IPO's Feb. 11 lockup date. Lefkofsky's previous ventures, Starbelly.com and a sports apparel branding venture with promotional item vendor Ha-Lo, both ended belly up and in court. Lefkofsky's vulgar style and fraudulent practices of inflating numbers to bilk shareholders should give pause to investors.
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Labels: INWK

Four Dividend Gifts: U.S. Bancorp (NYSE: USB - News), National City (NYSE: NCC - News), Asbury Automotive (NYSE: ABG - News), and United Online (NASDAQ: UNTD - News)
Cramer listed four stocks that "keep on giving" with their great dividends. U.S. Bancorp has a 4.4% yield and a 35 year history of consistently raising its dividend, Cramer observes, adding that it has a good buyback program and a "pristine balance sheet." In addition to National City's 4.2% dividend and its "big fat buyback" Cramer applauds the company for getting rid of its low-margin mortgage business and setting up a position in Florida. ABG, which sells cars in the $30,000 to $35,000 range has good earnings growth, comments Cramer, and has the money to raise its 3.3% dividend. Finally, Cramer calls UNTD "the big one" with a 6.1% dividend and a "serious growth business."

Hot and Cool: Omniture (NASDAQ: OMTR - News), InnerWorkings (NASDAQ: INWK - News), Riverbed (NASDAQ: RVBD - News), DivX (NASDAQ: DIVX - News) and Acme Pocket (NASDAQ: APKT - News)
Last week, Cramer discussed "hot stocks" and said that OMTR, INWK and RVBD were not "too hot to buy," and are good for the next six to nine months, but on Friday he emphasized that he would sell DIVX. Cramer's fifth hot stock is APKT, which is a pioneer in the Internet telephony business and "hasn't even started to run yet." Cramer notes that it has reported good profits for four consecutive quarters, has "massive revenue growth" and, since it is covered by only five analysts, APKT has upgrade potential. Although those who hold the stock on the April 10th expiration of its share lockup will be hurting, Cramer assures investors that they have a few months to watch the stock rise and says ACME is "too cool not to handle, and it is far from being too hot."

Desperate Hedgies: Apple (NASDAQ: AAPL - News), Google (NASDAQ: GOOG - News), Goldman Sachs (NYSE: GS - News), Research In Motion (NASDAQ: RIMM - News), AIG (NYSE: AIG - News), Devon Energy (NYSE: DVN - News), Johnson & Johnson (NYSE: JNJ - News) and Halliburton (NYSE: HAL - News)
Hedge fund managers whose funds have not been doing well in the past year are frantically selling stocks such as APPL, GOOG and GS which are "symbolic of the market" to make it seem as if the performance of their funds is related to the health of the Dow. Instead of worrying, Cramer suggests investors use this "short-term, rumor-down market" to pick up some good quality stocks such as RIMM, AIG, DVN, JNJ and HAL at low prices; "After buying them on the cheap next week, take them in 2007 and enjoy it," he said.
CEO Interview: Bruce Williamson Dynegy (NYSE: DYN - News)
Bruce Williamson said that his company's deal with LS Power will increase assets under management by 70% and will add more cash flow. When asked how the deal will affect DYN's exposure to natural gas, Williamson replied, "With LS Power, it is going to to drop our exposure of a dollar move of natural gas down from 10% of EBITDA to a 4% move in EBITDA... It stabilizes the platform." Cramer applauded Williamson and called him a "winner."

Labels: AAPL, ABG, AIG, APKT, DIVX, DVN, DYN, GOOG, GS, HAL, INWK, Jim Cramer, JNJ, Mad Money, NCC, OMTR, RIMM, RVBD, UNTD, USB

InnerWorkings (NASDAQ: INWK - News)
Continuing his week-long discussion of "hot stocks," Cramer discussed InnerWorkings, which outsources printing services and has gone up 87% since its IPO in August. The company has had a record of positive profit and net income and has a "right to exist" in spite of its competition. Cramer says that this stock has room to rise, but suggests that investors keep its Feburary 11 lockup expiration date in mind and to buy half of a position now and half after Feb. 11 or to swap out of the stock during that period. Cramer suggested taking 48 hours to do research on the stock before buying.

Adobe (NASDAQ: ADBE - News)
Cramer comments that Adobe "through no fault of its own, got pummeled on Monday in a vicious Nasdaq selloff," and he would use the opportunity to pick up this "indispensible" stock. Adobe was down because investors were afraid that it would report lower guidance, but when it didn't, the stock spiked. Cramer also mentioned that negative speculation by short-sellers might have kept the stock down. He would buy Adobe which is "too cheap for the wrong reasons" ahead of its Creative Suite 3 release, and ride it on a "four month magic carpet ride."

Verifone (NYSE: PAY - News)
Although holiday stocks have been played out, Cramer likes ancillary seasonal play, Verifone, which makes credit and debit card swiping machines and is "by far the market leader" in this business. The company is going to have a big upgrade in the U.S. and will replace their machines. In addition, Verifone has tremendous growth potential in the developing world, and is a cheap stock which is " one part ancillary Christmas play and 10 parts great stock," according to Cramer.
CEO Interview: Dr. Paul Berger, Nighthawk Radiology (NASDAQ: NHWK - News)
When asked about the company's hospital growth, Dr. Berger commented "At the end of the third quarter this year, we have approximately 981 hospitals which send us images every night, or approximately 18% of the hospitals in the U.S. And that's been a growth of 121 hospitals over the first nine months of 2006." He also discussed the world-class radiologists on staff and the technology which enables physicians to be more efficient. Cramer said he likes Nighthawk, but would not be against ringing the register since he is tired of defending a winning stock which investors are not thrilled about.
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Labels: ADBE, INWK, NHWK, PAY