Cramer's 'Mad Money' Recap: CEOs Who Should Go
TheStreet.com Staff
08/17/06 - 07:59 PM EDT
Click here for an archive of Cramer's "Mad Money" recaps.
Usually when a CEO leaves a company, that is bad news. But some CEOs are so bad, that if they leave "for family reasons," it would make their companies' stocks surge, Jim Cramer told viewers of his "Mad Money" TV show Thursday.
In a "CEO Hall of Shame" segment, Cramer named five CEOs whose departures would cause a spike in the stock of their companies.
The first CEO on the list was
Dell's (DELL Quote) Kevin Rollins, who, according to Cramer "managed to turn a great company into an embarrassment."
Next up was
3M's (MMM Quote) George Buckley, who is in over his head, Cramer said.
Michael Cherkasky, the CEO of
Marsh & McLennan (MMC Quote), was Cramer's third pick.
"Cherkasky doesn't even seem to know what his job is," Cramer said.
Cramer predicted Marsh & McLennan, currently trading at $25.71, would go to $32 if Cherkasky steps down.
"All he has to do is say his work is done," Cramer said.
Next, he named
Avon (AVP Quote) CEO Andrea Jung as a bad CEO, and said she has "run the company straight into the ground."
Avon reported a "terrible quarter," despite its promise of selling cosmetics to the Chinese, Cramer said. The problem is that the company's Latin American business is not doing well. At $28 and change, the stock could jump to anywhere between $32 and $34 and go as high as $35 "on Jung's much-needed departure," Cramer said.
Bausch & Lomb's (BOL Quote) CEO Ronald Zarrella "needs to be fired with all speed, if not terminated," Cramer said.
When this company had its contact lens-solution problem, "it seemed like the whole company went into hiding and had to be beaten to recall the stuff," he said.
"Zarrella was uncommunicative and couldn't have done a worse job with handling a problem," Cramer said. "If Zarrella says he's going fishing, the stock could go from $46 to $55 -- he's that awful."
Home Depot's(HD Quote) Robert Nardelli also made the list. Cramer called him "poison" and said Nardelli's "so hated that it's worth $5 [upside in the stock] the moment he leaves."
No. 5 and the "single-worst CEO" on Cramer's CEO hall of shame list was Peter Dolan from
Bristol-Myers (BMY Quote), shares of which Cramer has in his charitable trust,
Action Alerts PLUS.
"This guy can't stop getting his company into trouble," he said.
Bristol-Myers is losing patent protection on its biggest drug, Plavix, five years early, Cramer said, calling Dolan a "value destroyer."
He predicted the stock could go from $21 to $26 when the news comes over the tape that Dolan "wants to spend more time with his kids."
Chocolate Craving
Now that market players just had a great week, they want what's hot, but we're in for three more months where "boring is king," Cramer said.
You're either playing defense or losing money, and right now consistent secular growth stocks are the way to go, he said.
Hershey (HSY Quote) has low risk and high reward.
This is a stock that shouldn't lose too much, as it has limited downside, Cramer believes. Although Hershey has been unfairly smacked around by analysts, the stock is 3 points above its low and deserves to be much higher, he said.
Wachovia recently downgraded Hershey because of its subpar first-half sales, but Cramer believes Wachovia was wrong in doing so.
Hershey is below Wachovia's price target, so it's not making any sense, he said. Also, UBS reduced its price target for Hershey due to the hot weather and high gasoline prices, but according to Cramer, that doesn't make sense either.
In fact, Cramer believes Hershey has the best risk/reward right now out of almost all the stocks he's familiar with. It is a down-2, up-15 situation, he said.
Insurance Insights
The insurance industry is burning up, and Cramer said he has three "tarnished insurance companies that might be undervalued."
These are Marsh & McLennan,
American International Group (AIG Quote) and
Aon (AOC Quote).
Working through these three "fallen giants," Cramer tried to find the one that has recovered the best from two years ago when New York Attorney General Eliot Spitzer's probes hit.
Aon,
which was the least hit by Spitzer, has been "gobbling up domestic business and buying back stock," Cramer said. But the company missed its quarter by a nickel and its international business has fallen, he said.
Although it was able to bounce from Spitzer's wrath, it then went backwards and has become a House of Pain, he said.
Spitzer
knocked Marsh & McLennan down almost for good, but then the company replaced its CEO and avoided a disaster, he said. However, it's time for them to find yet a new CEO, Cramer said.
Marsh & McLennan's last conference call was "the single worst call of the quarter" he said. "The company missed the quarter by a mile."
Not only did the company not provide any guidance, but its new CEO is ignorant about his own business, Cramer said.
MMC is a "SellSellSell," Cramer said.
AIG, on the other hand, is a company that is back on its feet and undervalued, Cramer said.
It reported a "tremendous" quarter and has had a good rebound in all of its services, he said.
"AIG is so back, it's amazing," Cramer said. "I honestly can't believe the strength of this comeback."
Insurance is hot and cheap, and AIG is the best of breed in this space, he said.
Trading on Ameritrade
Cramer asked his guest, CEO Joseph Moglia of
TD Ameritrade (AMTD Quote), how business is going.
"Good," said Moglia. "We just released July numbers, and there was a seasonal drop off." Moglia said that the retail investor is a "lagging indicator of what's going on."
"When the market starts to pick up and do well, you start to see more involvement," he said.
When Cramer pointed out that Ameritrade bottomed when everyone was panicking in July, Moglia said the company had just announced results from the June quarter, which was a record quarter.
"We expect to have a record fourth year in a row, and we've increased guidance for 2007," Moglia said. "We believe in our own story, and it makes sense for us to buy back our own stock."
"This stock is an accurate predictor of what's going to happen," Cramer said. "Trading is going to come back big."
To view Cramer's interview with Joe Moglia, please click here.
Lightning Round
Cramer was bullish on
Becton Dickinson (BDX Quote),
Dean Foods (DF Quote),
Nuance Communications (NUAN Quote),
Valero (VLO Quote),
Consol Energy (CNX Quote),
China Life Insurance (LFC Quote),
Dow Chemical (DOW Quote),
Cisco (CSCO Quote),
Sunrise Senior Living (SRZ Quote),
Jack in the Box (JBX Quote),
Sonic (SONC Quote),
Intel (INTC Quote),
Ford (F Quote) and
Altria (MO Quote).
Cramer was bearish on
Abraxis Bioscience (ABBI Quote),
Sirius Satellite Radio (SIRI Quote),
Delek US Holdings (DK Quote) and
Ciena (CIEN Quote).
In the "Sudden Death" round, Cramer was bullish on
Qualcomm (QCOM Quote) and
Apple (APPL Quote).
He was bearish on
Brightpoint (CELL Quote) and
Weyerhaeuser (WY Quote).
Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by
clicking here.
For more of Cramer's insights during the Lightning Round, click here.
