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RealMoney Radio Recap: Inquiring Minds

TheStreet.com Staff

In a special "RealMoney" radio show dedicated to answering his listeners' questions, Jim Cramer said by first looking at the question-and-answer section in the transcript he can tell the difference between a genuine conference call and one in which management is snowing him.

Taking the Sprint Nextel (S Quote) quarterly conference call as an example, Cramer said that if people read the body of the call's transcript, they would believe the company is doing great. But then the Q&A started, and it was a nightmare, he said.

The second thing he looks for is the guidance, he said. Little to no guidance makes him skeptical, while a lot of guidance is a good thing and provides visibility, he said.

Cramer said he also looks for management confidence and company buybacks, including the price the company paid for the buyback.

Another thing to look for is if the buyback has retriggered the company's earnings. Energizer (ENR Quote) has systematically bought back stock and managed to raise its bar, Cramer said

"That shows false growth, so be careful," he warned.

"I also like to hear about what pace of acceleration or deceleration the revenues are at," he said. "Accelerated growth is fantastic."

Answering his next question, Cramer said the changes in technology have not changed the market significantly, other than allowing people to buy and sell much more cheaply and read a lot more about companies. TheStreet.com, which Cramer founded, allows you to read this information, he said.

When a mailer asked what the most satisfying part of market is, he said the market is not a game of culture or helping people, but of making money.

"It's not satisfying when you lose a lot, and it is when you make a lot," he said. "It's a bad day when you lose money and a good day when you make some."

IPO Odyssey

Initial public offerings can be good or bad, Cramer told a caller.

The best IPOs tend to be companies that are early on in a new business cycle, he said, adding that the dogs come in by the time every one has come public.

Cramer said he was intrigued when MasterCard(MA Quote) became public. Nobody thought much of this company, but it has become a big winner, he said.

"I look for out-of-the-way stuff that could work," he said. "When I look at an IPO, I don't necessarily want the hottest one."

When he was a hedge fund manger, he said he liked the ones that went up over time, like iRobot (IRBT Quote).

Cramer said he tends to like a company when it "gingerly" becomes public, adding that a lot of banks are like this.

In addition to banks, he looks for good IPOs in the aerospace sector, but two places he said he doesn't like are the biotech or tech areas.

Middleman March

Cramer said investment banks are a key part of corporate acquisitions.

"A company wants to grow when it feels its current growth is tapped," he said.

For this reason, companies go to investment banks, he said.

A Procter & Gamble (PG Quote) does not reach out to Gillette on its own. It's all done by bankers -- the middlemen, he said.

When an emailer asked about foreign markets, Cramer said he has historically not liked the Chinese IPO market because he feels as if he's being taken advantage of, since there is no serious Securities and Exchange Commission there. In addition, he feels the Chinese market is an insider's game. The Indian market, however, is very much like the U.S., he said, adding that he would own any of the Indian consulting companies or Tata Motors (TTM Quote), India's big car company, he said.

He doesn't even care which consulting company people buy, he said. "That's how bullish I am about them," he said.

Cramer said he also recommends Bangalore-based Wipro (WIT Quote), which is a little speculative.

People should go to India to diversify themselves overseas, he said.

For Latin America exposure, Cramer advised looking at America Movil (AMX Quote), Bancolombia (CIB Quote) and Homex Development (HXM Quote).

Cramer also suggested Colgate (CL Quote), an American company that has a lot of Latin America exposure.

Responding to a high-schooler who wrote in asking about how one prepares for a job on Wall Street, Cramer emphasized the necessity of reading the paper, and particularly the business section.

Cramer said that whenever he comes across an interviewee who wants to work for him and it becomes evident that that person doesn't read the paper, he doesn't consider that applicant any further.

The second piece of advice Cramer gave was to "be armed with two or three stocks you believe in."

"Don't be a wallflower when trying to get a job," he said "It won't work."

Also, show that you are a hustler and are willing to do things people are not willing to, he said.

"Never be afraid to do something that you regard beneath your station," he said. "There has to be some swallowing of pride."