For Tuesday’s “Mad Mail,” Cramer started by returning to NetSuite, a software-as-a-service provider that John in California had asked about during the Dec. 23 “Lightning Round.” The basic prognosis: Take profits.
As much as Cramer likes NetSuite’s business—it serves the back-end needs of mid-sized businesses; think accounting—the strong performance last quarter and the fact that Oracle’s Larry Ellison founded the company, the letter N is just too expensive. It currently trades at 117 times 2011 earnings. Look forward to 2012 and the number is still 69 times earnings. Even with the 27-percent long-term growth rate, that’s a lot more expensive than a similar company, Salesforce.com , that Cramer thinks is better.
Plus, NetSuite has doubled in share price over the last six months. Investors, therefore, are better off cashing out of the stock and looking elsewhere for their next return. At least until we see a sizable pullback here.
Turning to e-mail, Tony asked if Annaly Capital’s issuance of new shares—$135 million in total for the last two—was a strategy to pay the dividend. And if so, he wondered if Chimera Investment was the better play. Cramer defended NLY, which he’d recommended for the high yield, saying the stock after the most recent offering was up due to so much demand. Regardless, he doesn’t think the company is using the money to pay the dividend; it’s going toward new mortgages. So he remains bullish on Annaly.
Sharon in New York asked if the VIX , the S&P 500 volatility index, was a good play, to which Cramer said no.
“You don’t need to play the VIX,” he said. “Own a stock with a good dividend.”
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