Mad Money Recap
Cramer's 'Mad Money' Recap: Making Gold From Steel
TheStreet.com Staff
01/13/06 - 07:24 PM EST
Click here for an archive of Cramer's "Mad Money" recaps.
When does a loser stock make you mad money? When it's US Steel(X), Jim Cramer told on his "Mad Money" TV show Friday. Even though he's not a fan of the steel sector, US Steel is an incredible takeover target, Cramer said. That's because there are three companies getting ready to bid for Dofasco, a Canadian steel company that is the same size as US Steel and in the same business as US Steel, he said. The two companies that don't get Dofasco will be looking for someone else, and US Steel is dirt cheap, according to Cramer. And he thinks that makes US Steel the next logical choice. CSFB upgraded US Steel partly on the basis of takeover speculation, and that even if consolidation doesn't happen speculation could drive the stock higher, Cramer said. However, he warned, it's not worth owning if it's not a potential takeover target. A caller asked whether carbon fibers are a good investment or a speculative play. Cramer said to be very careful about choosing a carbon fiber stock, but recommended looking into Cabot(CBT).
ISE Offers Investment Option
Stock platforms have been on fire, Cramer said, and now it is time for International Securities Exchange(ISE) to play catch-up. Its stock will move because it's an options exchange, he said, pointing out that the options market has grown at a 17% compound annual growth rate, a lot faster than the equity market.
Plus, he said, there's still pricing power in the options market.
There is no reason to expect ISE's excellent growth picture to change since it has a top reputation among traders for superb execution, he said.
And to sweeten the deal, Cramer said it traded at 30 times earnings, in line with its peers, but is growing faster and taking more market share than the competition.
The Seven Samurai
Cramer presented the final member of his "Seven Samurai" top picks in Japan, Matsushita Electric Industrial(MC). Japan is turning around. Big-screen plasma TVs are hot and Matsushita is making itself into a flat-screen powerhouse, he said. In fact, Cramer said he'd rather own Matsushita at $22 than Corning(GLW) at $24.80. He said that Matsushita intends to control 40% of the plasma market by 2010, and that means 10 million units. The company is well-positioned to be the No. 1 player because it's upping its production capability faster than the competition, he said, pointing out that it's opening plants sooner than expected and plans to spend $1.57 billion on a plasma TV plant in western Japan. That would give Matsushita the biggest plasma TV production capacity in the world, Cramer said. He told a caller that even though Sony(SNE) is boosting its plasma TV business, the stock is only going higher because the Japanese economy is turning around. Cramer was asked which of his Seven Samurai plays he would choose if he could only have one. He said that the finance play Mitsubishi UFJ(MTU) would be his pick of the group, which also includes Kirin(KNBWY), Kubota(KUB), Kyocera(KYO), Honda(HMC) and Toyota(TM).Mad Mail
Reaching into the "Mad Money" mailbag, Cramer answered a viewer who asked why JDSU(JDSU) is trading higher than CMGI(CMGI). Cramer said it's because CMGI hasn't turned around, while JDSU has improved dramatically and diversified. He agreed with a viewer who noted that Occidental Petroleum(OXY) is very cheap, adding that he owns it for his Action Alerts PLUS charitable trust. But he said to stay away from Guangshen Railway(GSH) because he would stay away from the Chinese equity market altogether. He commended a viewer for pointing out home health care company Matria Healthcare's(MATR) potential upside given the fact that chronic illnesses such as diabetes are on the rise. And finally, he said that there's still money to be made in Under Armour(UARM).Lightning Round
Cramer was bullish on Peabody Energy(BTU), Google(GOOG), T. Rowe Price(TROW), Continental(CAL), GOL Linhas(GOL), Dynegy(DYN), Chesapeake Energy(CHK), Cooper Cameron(CAM), TradeStation(TRAD), Reynolds & Reynolds(REY), Johnson Controls(JCI), Polaris(PII), Hewlett-Packard(HPQ), Todco(THE), GlobalSantaFe(GSF), Transocean(RIG), ENGlobal(ENG) and Aqua America(WTR). Cramer was bearish on SulphCo(SUF), Sonic(SONC), JetBlue Airways(JBLU), Dell(DELL), Steelcase(SCS), ASV(ASVI), Quiksilver(ZQK), Engelhard(EC) and Suntech Power(STP). For more of Cramer's insights during the Lightning Round, click here.Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.