Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week, he blogged on price trumping fear in mortgages and plastic, Motorola's turn to welcome Icahn, drowning out the Fed noise, not giving up on Google and positive signs in the oil patch.
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Price Trumps Fear in Mortgages, Plastic
Originally published on 1/29/2007 at 11:58 a.m.
If everything is so horrible in mortgage land and credit card land, does someone want to tell me why anyone would want
Countrywide(CFC Quote) or
MasterCard(MA Quote)?
But Countrywide is the subject of buyout chatter by
Bank of America(BAC Quote), which doesn't need to double-down on mortgages. Yet that's just what B of A would be doing if it does the deal.
We're supposed to be so fearful of credit cards, yet there's been one of the most furious big rises that I have ever seen in MasterCard.
Countrywide's got models that tell me if you know how to lend to the subprime market, you are not in trouble In fact, you are in clover. MasterCard's price action says that the consumer is spending and not stretched.
When I see these moves I keep thinking, "Don't freak out on these two issues because the ultimate tells of the groups are ramping." That's just a great defense when the bears go nuts with these issues.
Random musings: I've found your new favorite tool:
TheStreet.com Ratings Screener. Use it to find exactly the stock you're looking for -- c'mon, I know you resolved that this is the year you get more involved in stocks. This is the easiest way yet to make sense of a universe of more than 6,000 names. It's all here, sorted by market cap, rating and more.
At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.
Motorola: Give a Warm Welcome to Icahn
Originally published on 1/30/2007 at 9:09 a.m.
Motorola (MOT Quote) needs Carl Icahn.
I have never seen a company go from aggressive competitor to so-so indifferent player like this, other than what Carly Fiorina did with
Hewlett-Packard (HPQ Quote).
On the other hand, I have seen Icahn stir things up in a positive way, and he should be welcomed, Jerry York-like, to Motorola. (York was helping
General Motors (GM Quote) to turn around until he quit in frustration because the company stopped listening to him.)
The cell-phone market, which Motorola used to dominate, hasn't turned as horrid as the company implies.
Sony Ericsson has done quite well. The climb in
Nokia's (NOK Quote) stock is real; that's from share-take and better phones.
As someone who believes in the
Apple (AAPL Quote) iPhone (how the heck did I get in the minority on that issue?!), I think things are only going to get worse for Motorola.
A few months ago, I had
Time Warner's (TWX Quote) Dick Parsons
on my show. I asked him what Carl Icahn brought to the party. He was enthusiastic and said that Icahn was a catalyst to bring about change, that he was constructive, had a lot of good ideas.
I bet Icahn does the same thing at Motorola if they let him.
They should welcome him aboard.
At the time of publication, Cramer was long Hewlett-Packard.
Drown Out the Fed Noise
Originally published on 1/31/2007 at 8:04 a.m.
The difficulty for the
Fed is that a case can be made for anything.
If you listen to the conference calls of
UPS (UPS Quote) and
3M (MMM Quote), both truly representative of the U.S. economy, you need an easing and you need one tomorrow.
Last week,
FedEx (FDX Quote) was no different, and the same was true with
Tenneco (TEN Quote) and
Visteon (VC Quote).
You want the Fed to come to the rescue of
Countrywide (CFC Quote) and every homebuilder.
GM (GM Quote) and
Ford (F Quote) desperately need an easing. So do
Caterpillar (CAT Quote) and
Black & Decker (BDK Quote). Wood-product companies (
Plum Creek (PCL Quote)) and chemical companies have been pretty disastrous.
These companies' woes barely make the radar screen.
Instead, we focus on robust consumer spending a la
Nordstrom (JWN Quote) and
Coach (COH Quote). We look at the good traffic of the rails -- mostly imports or raw goods.
We like what we see with
Honeywell (HON Quote) and
United Technologies (UTX Quote), even though those are more airplane-cycle stories, with much less to do with the economic cycle controlled by the Fed.
And, of course, we look at the profits of the mineral and steel companies, and we say, wow, bountiful, even though year over year, they aren't so hot and the latter is still in a glut.
To me, that's not enough to weigh in favor of a steady policy.
Of course, the macro folks focus on employment, which mocks the weakness and makes the whole idea of a cut seem preposterous.
All in all, though, if you look at the actual reporting companies, you simply cannot take an easing off the table, no matter what the futures say.
For stocks, what does it mean? The uncertainty over rates remains oddly good -- no recession or they would take action, no inflation or they would take action.
Just like now they are out of the picture, which means there's plenty of opportunity if you drown out the Fed noise.
At the time of publication, Cramer had no positions in the stocks mentioned.
Can't Give Up on Google
Originally published on 2/1/2007 at 2:00 p.m.
Google's(GOOG Quote) tough because, as great as it is, you still
have to say it is a "decelerating" revenue story. And that's only because it can't grow at 99% as it did last year, although the 40% it is growing still ain't shabby.
Nevertheless, there are enough mutual funds out there that simply will not buy decelerating revenue growth, including many that only buy ARG, or
accelerating revenue growth,.
But that doesn't mean you should give up on Google. I still believe the stock can get to $600, but it won't get there as quickly as when it was an accelerating story.
The reason? It's harder to value. Let's contrast it with
eBay(EBAY Quote) and
Yahoo!(YHOO Quote), both of which now sell at a higher multiple to earnings than Google. That's amazing, because both are mediocre compared with the earnings machine that is Google. But they are broken stories that might get fixed, so we will pay more for them because they
can accelerate.
Still, let's remember that Google has 70% of the online ad market, and that market share is only growing. That's like
Microsoft(MSFT Quote) circa 1985, or
Intel(INTC Quote) circa 1990s.
Plus, Google is just beginning to take share of the $600 billion ad market. Leaving it is out of the question.
That's why it's flapping here. You should also keep in mind that this stock only increased by 17% last year on all of this great growth, so don't per se say that it is expensive.
So, hold it. Buy it if it goes down to $450, because then you will have a $150 move ahead and that's a fantastic reward.
Random musings: More noodling on
Dell(DELL Quote) brings me to the lack of upside given that it really is a distribution machine that is up against two other distribution machines selling similar commodities:
Acer and
Lenovo. I think that caps the stock at $30, which is still OK, given a couple of bucks downside. But Dell lacks the earnings leverage of a
Hewlett-Packard(HPQ Quote), which should be bought right here.
At the time of publication, Cramer was long Yahoo! and Hewlett-Packard.
Positive Signs in the Oil Patch
Originally published on 2/2/2007 at 7:24 a.m.
We found out yesterday what happens when earnings peak in the oil patch, but the numbers are great anyway: The stocks go up.
When you get a magnificent quarter, as you
did yesterday with
Exxon (XOM Quote), but the earnings are down 4%, you would expect the growth hounds on the Street would run from it. Nope, they bought it.
They did the same to
Royal Dutch (RDSA Quote), which, at last, is out of the doghouse because of its high replacement rate, although it is using tar sands in its calculations.
And they did the same to
Chevron (CVX Quote),
even though it hadn't reported yet.
These are all great signs for a group that has been viewed as finished. One of the reasons is that they are making
too much money to ignore. They are buying back shares and paying dividends like mad.
Still, it is an amazing change, as very few groups have ever been able to resist the gravity of down earnings. This group is one of them.
At the time of publication, Cramer had no positions in the stocks mentioned.
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