Jim Cramer: Blue Nile, ValueClick, IAC, Merck, Varian, Lowe's
Blue Nile, an online jewelry dealer, exceeded earnings expectations for its most recent quarter, announced a large stock buyback and has no inventory, said Cramer, a market commentator and former hedge-fund manager.
The company may bolster revenue by selling other luxury goods in addition to jewelry and has a large cash balance, Cramer said.
ValueClick, an Internet advertisement company, collects revenue based on whether online ads are being clicked, Cramer said. The company is the second-fasting growing online media company, after Google Inc. (GOOG), and has also conducted a large stock repurchase, Cramer said.
News Corp. (NWSA) may rise because of the growth of its MySpace.com unit, Cramer said.
IAC/InterActiveCorp (IACI), the Internet and media company run by Barry Diller, is also worth buying because stock analysts like recently named President Douglas Lebda and the company spun off its travel business, Cramer said.
The company's Ask.com search engine is getting more users and advertising revenue while the performance of its Home Shopping Network may turn around under the leadership of ex-Nike Inc. executive Mindy Grossman, Cramer said.
Companies in the Internet business that should be avoided include EBay Inc. (EBAY), Amazon.com Inc. (AMZN) and Time Warner Inc. (TWX) because of poor acquisitions and ``tired'' management, Cramer said.
EBay, the world's largest online auctioneer, made ``the single worst acquisition of 2005'' when it bought Skype Internet telephone service, which won't generate profit, said Cramer, who added that earnings growth is slowing.
Amazon.com, the world's largest online retailer, has a high price-to-earnings ratio relative to competitors, said Cramer.
Cramer added that EBay Chief Executive Officer Meg Whitman ``cares more about scoring points in the social column than on the business pages,'' while Amazon.com chief Jeff Bezos is neglecting the company because he's ``building a spaceport.''
Time Warner's America Online Inc. unit is ``dead'' and weighing down its parent company, Cramer said.
Yahoo! Inc. (YHOO), the second most-used Internet search engine, may also fall if its financial performance for the current quarter doesn't improve, said Cramer.
Merck & Co., the fourth-largest U.S. drugmaker, is worth buying because it's challenging lawsuits from users of its Vioxx painkiller, Cramer said. The company also has a strong pipeline of new products, Cramer said.
Varian Medical Systems Inc. (VAR), a supplier of radiation-therapy systems for cancer treatment, is a good stock to buy as the economy slows, Cramer said.
Cramer recommended Lowe's Cos., IAC/InterActiveCorp., Cameco Corp. (CCO), WCI Communities Inc., Zimmer Holdings Inc. (ZMH), Evergreen Solar Inc. and Anheuser-Busch Cos. in response to questions during the show's first ``Lightning Round'' segment, and Hershey Co., Crocs Inc. (CROX) and UnitedHealth Group Inc. (UNH) during a second, shorter segment.
Cramer said he owned Yahoo!, News Corp., Anheuser-Busch and UnitedHealth for his charitable trust.
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