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On the Line: Chattem CEO Zan Guerry

Tuesday, 15 Jan 2008 | 3:41 PM ET
Chattem CEO on M&A
An outlook on M&A and other topics, with Zan Guerry, Chattem chairman & CEO and Mad Money host Jim Cramer.

Last week, Cramer recommended Chattem, maker of drugstore staples like Icy Hot, Gold Bond and Cortizone-10, saying the company’s brand recognition was strong enough to carry the stock higher even during an ecomomic slowdown.

On Monday's Mad Money, Chattem CEO Zan Guerry spoke to Cramer and reaffirmed his belief that Chattem’s best days are still ahead.

Chattem's six major brands – Icy Hot, Gold Bond, Selsun, ACT, Cortizone and Unisom – now make up three quarters of the company's sales, Guerry said, and all are growing between 10% and 15%.

Much of that success stems from a business model that hinges on advertising. Guerry said the company has substantially boosted its media spending with a new commitment to refocus advertising on "tired brands" like Balmex and Kaopectate.

With a strong balance sheet, good cash flow and several new brand extensions planned for this year (and the possibility of a takeover down the road), Cramer believes Chattem "will stay a winner."

"We're enjoying this great momentum and we'll keep it going," Guerry said.

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