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The Case of the Dueling Analysts

Two days after Goldman Sachs downgraded H.J. Heinz last Tuesday, UBS upgraded the food giant's stock.

"When analysts fight, you always win, because going through these dueling analyst reports is a fantastic way to think through the bull case and the bear case, so you can figure out which direction the stock is headed," Cramer said Monday, adding that in the Heinz case, both analysts have actual, substantive disagreements.

To Goldman, Heinz's brands are tired and lack volume. If Heinz wasn't discounting its products, Goldman thinks the company would be worse off. UBS, on the other hand, sees Heinz growing in emerging markets with innovative products that should drive steady earnings growth in the U.S., too. The two firms differ on whether Heinz is innovative.

So how did Goldman and UBS arrive at different viewpoints on the same company?

According to UBS, Heinz is poised to deliver long-term earnings growth of 9 percent, much better than the analyst consensus of 7 percent. UBS also raised its revenue growth estimate from 4.5 percent to 7 percent through 2016. Thanks to better fundamentals and growth in emerging markets, UBS thinks Heinz deserves to trade a premium to other packaged food makers. Heinz currently trades at 15 times earnings, whereas its peers trade at 14.5 times earnings.

Cramer thinks UBS' call makes sense, but does have one problem with it. The firm is forecasting a strong recovery in the U.S., which will boost Heinz business. He's just not sure that will happen.

Meanwhile, Goldman thinks Heinz is propping up sales through promotions. The uptick in promotional activity — nearly double that of its peers — is hiding volume declines, Goldman said. In other words, if Heinz wasn't discounting so greatly, it would be selling a lot less product. The firm thinks Heinz's developed market business looks venerable, which is troubling being as it gets nearly 85 percent of its profits there. It also sees private labels taking share in Western Europe and noted a decline in its U.S. distribution. Heinz is experiencing a decline in the U.S. because it has been under-promoting there and its brands are getting tired, the firm said.

At the end of the day, Cramer thinks UBS' upgrade is more convincing than Goldman's downgrade. He likes the international expansion and thinks its product innovation is for real. Its Smart Ones Weight Watchers-branded frozen entrees business is a play on the healthy eating trend he believes in.

In the end, Cramer thinks Heinz is a sell if you think we're in a soft patch. If you think this is a double-dip recession, though, he thinks Heinz is a buy.

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