The Return of H&R Block
Cramer’s always saying that you can’t love stocks – after all, they’re only pieces of paper. On the other hand, hating a stock is often appropriate. There are plenty of stocks that are just plain terrible, and they deserve to be hated, he said. H&R Block was one of those stocks; a stock Cramer absolutely loathed for years.
But it looks like the tide has turned for this tax preparation company. A combination of fierce domination of its competition, a new CEO who got rid of a lagging business and a historically strong recession performance has redeemed HRB to Cramer and now he’s convinced it’s going higher.
H&R Block is absolutely “taking share and kicking butt,” as far as the Mad Money host is concerned. Its main competitor, Jackson Hewitt , recently announced awful earnings and the stock is down 60% so far this year. At the same time, HRB is firing on all cylinders while keeping its boot on the proverbial throat of its competition. It will be clear just how much market share HRB took from JTX once this tax season is over.
Just this week, HRB announced that it is finally getting selling Option One, its mortgage servicing business that Cramer said has been like an albatross around its neck. Without exposure to mortgages and the natural infection that comes with that association, HRB is a much easier company to understand. And now it’s free to start buying back shares thanks to a little-known capital restrictions law that prohibited it from doing so while owning Option One.
HRB’s new chairman, Richard Breeden, is another reason why this company’s got its groove back. He was the former head of the SEC and now he has come into HRB with tremendous clout and he’s completely focused on getting back to its core tax business.
It also helps that, HRB has done extraordinarily well in the last couple of recessions, perhaps proving that old cliché about death and taxes. Cramer expects its performance to continue in these times, too, thanks to its turnaround. He would buy it under $20. It was up Wednesday, so be patient and wait for a pullback.
Be sure to watch the video for Cramer's calls on capital gains and whether now’s the time to buy the financials.
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