Cramer's 'Mad Money' Recap: Next Week's Game Plan
Cramer said while Norwegian stock has risen sharply, the company still has a ton of debt and a shareholder base that includes large equity funds that have yet to cash out of their shares. When those lockups expire, Cramer said, the stock could get pounded, especially from these inflated levels.
But the problems at Norwegian aren't a problem for the rest of the industry, Cramer noted, as the demand for travel and leisure is rising at a time when there's less supply of new ships coming to the market.
Cramer said the key matrix to watch for the cruise lines is what's called "net yield," which is the amount the cruise lines make per passenger for every cruise day sailed, after expenses. He said a 1% move in net yield can translate into a 7% move in earnings and net yields are poised to go higher as more passengers book their trips online, thereby avoiding a 12% fee paid to travel agencies.
So which cruise line rules the roost? Cramer said that Carnival once again comes out on top as the company has 48% market share, has less debt and is more shareholder-friendly with its 2.6% dividend and stock buyback program. Carnival also has a successful fuel-hedging program that eliminates fuel price surprises. It also woos Wall Street with conservative guidance that should be easily beaten.
An Obamacare Winner
In his second "Executive Decision" segment, Cramer spoke with Keiran Gallahue, chairman and CEO of CareFusion (CFN) , a company that had an earnings beat of 10 cents a share on a 2.1% rise in revenue and better than expected gross margins. Shares of CareFusion are up 26% since Cramer last spoke with Gallahue in November 2011.
Gallahue said that when it comes to the new Obamacare rules, CareFusion comes out a big winner. He said hospitals, more than ever, need to both reduce their cost of care as well as improve patient safety, and that's exactly what CareFusion's products are designed to help them do.
When asked about the company being spun off from Cardinal Health (CAH) , Gallahue said that it was critical that CareFusion, a technology company, be spun off from its non-technology parent. He said that as a tech company, the investments are different, the timelines are different. For CareFusion, a healthy research and development budget is critical, all of which they're better able to manage now that it is a standalone company.
Cramer said that investors looking for a pure play on health care should look no further than CareFusion.