Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
NEW YORK (TheStreet) -- There's no hurry to put money to work in this market, Jim Cramer told his "Mad Money" TV show viewers Wednesday, but for some stocks it's already too late to sell. That was Cramer's takeaway from Wednesday's market action as the averages fell big on what appears to be more gridlock from Washington.
Cramer said while the clock is ticking for Congress to reach a deal, the market seems to be following the same playbook it did last year when the debt ceiling debacle caused the U.S. to see its first-ever debt downgrade. Back then, the markets fell 19%, noted Cramer, and it didn't matter what stock you bought, you were going to lose money.So as the same scenario plays out again this year Cramer said. The market will eventually stabilize, and when that happens, investors need to be ready to buy, as the lows were the perfect time to buy last year. Cramer said some stocks, like Coca-Cola (KO), a stock which he owns for his charitable trust, Action Alerts PLUS, along with General Mills (GIS) and ConAgra (CAG), all seem to be stabilizing and might be the first stocks to turn positive. Coke, in particular, is not U.S.-centric, noted Cramer. With input costs falling, the stock remains a winner. Another group worth nibbling at are the dividend stocks, stocks that had great yields that are now even better with even bigger yields. Those include names like Verizon (VZ), which has fallen from $47 a share down to $42 a share, sending its yield near 5%. Cramer said he'd be a buyer at 5%, and buy even more at 5.5% and 6% if shares fall that low. For these select groups, it's too late to sell, said Cramer, and will soon be time to start buying.
'Upside Surprise Party'If past government-induced crises have taught us anything, it's that some stocks turn faster than others, Cramer told viewers. And that's certainly the case with stocks that beat on their earnings, then fall with the broader markets. To celebrate these companies, Cramer threw an "upside surprise party" for stocks that he feels are now insanely cheap based on the results they recently posted. Tonight's honoree was GNC (GNC), the healthy-living chain of stores dedicated to vitamins and supplements. GNC delivered a three-cents-a-share earnings beat on a 15% rise in revenue and also offering upside guidance for the rest of 2012 and 2013. Cramer called that the "triple play" of earnings releases. Yet despite its strong results, shares of GNC have fallen a full 10%, in part on fears about the company's new loyalty program being tested in several markets. Under the old plan, customers paid a $15 annual fee, then received discounts up to 20% on select items at certain times of the month. Confusing to say the least. But under the new plan, the card is free and smaller discounts can be received everyday, similar to grocery store rewards programs customers are already familiar with. But for some investors, this new program is cause for concern, as it will provide customers with too many discounts and cause a hit to GNC's gross margins. They also cautioned that GNC only delivered a 9% rise in same store sales vs. the 12% that some analysts were expecting. Cramer said all of these fears are misguided, as GNC has seen nothing but positive results with its new program and while there may be an initial hit to margins up front, the long-term success of the new loyalty program will bring higher sales. That's why he sees GNC as a buy, buy, buy now that shares have fallen $4 from where the company reported its stellar results.
Celebrating CVS CaremarkThe next party guest for Cramer's "upside surprise party" was CVS Caremark (CVS), another company that delivered a triple-play of earnings including a penny-a-share earnings beat, a 12% rise in revenue and upside guidance. Shares of CVS are now down 8% from their highs. Cramer said the naysayers have a host of reasons not to like CVS, not the least of which is the fiscal cliff. But are consumers really likely to forego medications and toothpaste in the event their taxes go up? Cramer thinks not. Some investors are also equating weakness at rival Walgreens (WAG) with weakness at CVS, but that's just not true, said Cramer, as CVS is clearly taking share from Walgreens and others. Cramer acknowledged that the dispute between Walgreens and ExpressScripts (ESRX) was a big win for CVS earlier in the year; now that the dispute has ended, CVS will lose some of those prescriptions, but that negative news has already been priced into the stock. With shares of CVS now trading at just 12 times earnings and the company having a 13.2% growth rate, Cramer said this is one stock that's simply too cheap to ignore. The company also has an analyst day coming in December which should help boost shares with the analyst community. Cramer said he'd be a buyer of CVS on any weakness.
Lightning RoundIn the Lightning Round, Cramer was bearish on Magnum Hunter Resources (MHR), SandRidge Energy (SD), Arena Pharmaceuticals (ARNA), AK Steel Holding (AKS) and BorgWarner (BWA).
Am I Diversified?In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio included: Amazon.com (AMZN), Apple (AAPL), Walt Disney (DIS), National Oilwell Varco (NOV) and TeraData (TDC). Cramer advised selling TeraData and adding a drug stock like Merck (MRK) or a telecom like Verizon (VZ). The second portfolio's top holdings included Apple (AAPL), ExpressScripts (ESRX), Humana (HUM), Verizon (VZ) and Excelon (EXC). Cramer said this portfolio needed a stock in the oil patch, something like MarkWest Energy (MWE).
No Huddle OffenseIn his "No Huddle Offense" segment, Cramer said the worst may now be over for investors in Facebook (FB) and the best may be yet to come. That was his takeaway after the lockup expiration of nearly 770 million shares of stock not only didn't tank the stock but actually caused it to rally up 12% in what was otherwise a horrible market. Cramer said there are a few reasons why this occurred. He said first, the lockup was well known by all and therefore took no one by surprise. Second, many of the insiders who were able to sell likely already hedged their positions and didn't need to sell today. Finally, Cramer said there does indeed appear to be a turn in Facebook's mobile ad initiatives, something that would be terrific for shareholders. Given this difficult market, Cramer said he would only be a buyer of Facebook on weakness, but indeed, the worst may now be over for the company and its struggle stock. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV