Mad Money

Passing Cramer's Rigor Test


The Kelley School of Business’ Reese Fund is made up of 20 students that belong to the Kelley Investment Management Academy. Students have to pitch their stocks to a board of successful Wall Street alums to get their positions into the $500,000 fund. In that tradition, Cramer had a few of those students pitch their stocks to him to see if they got the Mad Money seal of approval.

Dan’s stock was Spartan Motors, for three strong reasons in particular – the company’s sales of the chassis it makes for both emergency and military vehicles, and its exposure to RVs. 

Everyday 55,000 people reach retirement age, Dan told Cramer, and those people don’t want to be in the bingo lounge - they want to be on the road, enjoying themselves. That translates to big profits for SPAR, he said.

And in this post-9/11 world, safety is an immense concern. Municipalities don’t want to be stuck with the liability inherent in 54% of fire trucks in use being 15-20 years old. Again, with Spartan being a major manufacturer of these vehicles, this equals big numbers for the company.

Investment Club Q&A

Finally, SPAR is a defense-spending play, namely MRAP (mine resistant, ambush protected) military vehicles. The company just signed a large contract with Force One Protection, Dan said, so investors could expect a great return on investment.

On top of all this, only two analysts cover the stock, and Dan says Spartan will murder numbers when it reports on April 27. “If they do that, special Indiana shout out to you, my friend,” Cramer said, “Good idea, good idea…”

Wes was big on Rock-Tenn, a paper and packaging company that he said is enjoying pricing power right now as it pays down debt and executes a huge share buyback.

Why won’t the Chinese come in and wreck this company like they did so many others? Cramer wanted to know. “They [Rock-Tenn] package ice cream and milk,” Wes said, “and I don’t think they can ship that from overseas.” It’s just too expensive. Even still, Wes said analysts hate the stock, and there’s huge short interest.

“I like both of these ideas so far,” Cramer said.

The last stock was from Adam, who was pumped about Plantronics. The Reese Fund owns PLT, a marketer and manufacturer of headsets. “We made a ton of money on the stock,” he said, “and we’re going to make a ton more, because there’s still a lot of growth left in the stock.”

Adam did well defending his pick against Cramer’s penetrating questions, and Skeedaddy was forced to give it a thumbs up.

The Reese Fund owns Plantronics.

Questions? Comments?