Cramer: Playing the Ultimate Rumor Stock
NEW YORK ( Real Money ) -- When someone comes in and buys thousands of out-of-the-money calls on Clorox
Clorox, these days, is the quintessential rumored stock. It doesn't have much growth to speak of. It has a bunch of companies that truly don't belong under one roof unless you can figure out how charcoal, kitty litter, Burt's Bees and Seven Seas salad dressing dovetail with trash bags, bleach and other cleaning supplies. I know I have never been able to figure it out.
But I know this. In a world where a bunch of second-rate brands under the Hillshire Brands
Who is to think that it doesn't make sense for Clorox to go more food and merge with Pinnacle
So many ways to skin the cat with Clorox.
Now, all that said, people have been speculating that this is the end of Clorox for as long as there has been Clorox. I can't tell you how many times I bet that this company, along with Heinz
Clorox is hard to value. It has a 3%-plus dividend, which is terrific and it regularly boosts the payout. But it does sell at 21x earnings, despite declining volumes and sales. That's way too expensive.
No matter, here's the key statistic you have to keep in mind. Clorox is less than a $12 billion company with products we all know and a secure and growing presence because of line extensions. That aisle space comes at a premium and if you are any one of these food and consumer packaged goods companies, you might be thinking this is a once-in-a-lifetime chance to pick up extremely-high-quality brand names with very cheap debt.
Now, this is not a knock on CEO Donald Knauss. Every single one of the companies I follow that does business in the supermarket is challenged, with the exception of WhiteWave