RealMoney Radio: Snow Job
"I get to talk with many CEOs, and while sometimes I know when they are snowing me, sometimes I take them at face value," Jim Cramer said on his "RealMoney" radio show Thursday.
By talking to CEOs, Cramer said he is trying to gauge how a company is really doing.
A couple of months ago, Frank Baldino, the CEO at Cephalon (CEPH), came onto Cramer's "Mad Money" TV show and insisted that its drug Sparlon would get a thumbs-up from the Food and Drug Administration, he said.
However, the FDA not only gave it a thumbs-down, but they don't want to hear about it anymore, Cramer said. "Sparlon is dead."If Baldino had said that he wasn't sure what would happen, then that would have been someone Cramer said he would have wanted to do business with. But now the stock is down $8, and Cramer said he doesn't want to be near it because Baldino is someone he can't trust.
Alive and WellAlthough there is a notion that the American consumer is being too cautious, J.C. Penney (JCP) reported an amazing quarter, he said. The stock is cheap, and the company is buying back stock. If you listen to their conference call, J.C. Penney affirms that the consumer is not dead and is spending, Cramer said. Similarly, Disney (DIS) reported stronger-than-expected numbers in their quarter and said people are going to theme parks. Therefore, even though gasoline is expensive, the consumer wants to go out and be entertained, Cramer said. "The consumer is alive and well."
Cramer on DemandEvery week readers of TheStreet.com vote on the stock they most want Cramer to talk about. This week's stock was Starbucks (SBUX), he said. Although Starbucks' latte is one of Cramer's joys and a part of his routine, he said this is a tough one for him. They reported a bad quarter and said it was because they offered a banana frappuccino that took too much time to prepare, he said. When a company makes excuses about what is causing its problems and has a declining growth rate -- and when people are in a market environment where they don't want to pay $4.50 for a cup of coffee - the stock needs to be avoided until we see what happens in the next quarter, Cramer said. To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.
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