Cramer's 'Mad Money' Recap: Next Week's Game Plan
TheStreet.com Staff
06/13/08 - 08:00 PM EDT
Click here for an archive of Cramer's "Mad Money" recaps.
Jim Cramer told viewers of his "Mad Money" TV show Friday that his game plan for next week hinges on the Standard & Poor's proprietary oscillator.
Although he doesn't buy into most technical analysis, Cramer said the oscillator has proven to be a reliable gauge of the market over the past 20 years.
The oscillator indicates the amount of buying or selling pressure on stocks. When the oscillator hits +5, it's a sign to sell stocks, while -5 is the queue to buy.
According to Cramer, Friday's market rally was spurred by technical factors after the oscillator dipped to -6. Cramer said that's the signal to buy into the most beaten down sectors of this oversold market to take advantage of the upcoming snap back to normal levels.
These are some of the beaten-down banking stocks he would consider buying. They include:
Wells Fargo (WFC Quote) and
JP Morgan (JPM Quote).
He also would consider a short-term trade in some old technology names like
Research In Motion (RIMM Quote),
Salesforce.com (CRM Quote),
Hewlett-Packard (HPQ Quote),
Google (GOOG Quote) and
IBM (IBM Quote).
In the "new-tech" space, Cramer still likes
Ingersoll-Rand (IR Quote),
Emerson (EMR Quote),
Eaton (ETN Quote) and
Parker Hannifin (PH Quote).
For a good defense play, Cramer recommended
L-3 (LLL Quote).
In other sectors, Cramer said he likes
Owens Corning (OC Quote) and would even consider
Toll Brothers (TOL Quote) as a trade. And finally, in retail he'd consider picking up some
Costco (COST Quote),
Cramer's Oversold Buy List |
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Wal-Mart (WMT Quote), a stock which he owns for his charitable trust
Action Alerts PLUS,
Jones Apparel (JNY Quote) and
VF Corp (VFC Quote).
On the negative side, Cramer recommended waiting for a pullback before buying some of the names he's touted this week, mainly the wildcat drillers.
An Orphan Stock
Concluding his series on wildcat oil drillers, Cramer recommended
RAM Energy (RAME Quote).
RAM Energy operates in Texas, Louisiana, Oklahoma and West Virginia, with 39 million barrels of proven reserves.
As with other wildcatters Cramer have recommended, RAM Energy is all about its exposure to oil shale fields and their potential. The company has already raised its production guidance and Cramer said Wall Street will love the company's growth.
Cramer cited the expiration of 18.8 million warrants, most with a $5 strike price, as one of the catalysts that will allow shares of RAM to begin edging higher. He also said RAM is what he calls an orphan stock, with only four analysts covering the company, none of which are from a major firm.
Cramer said the stock will rise once Wall Street starts taking notice of RAM.
Cramer said this $5 stock could go as high as $8, but he warned investors that this speculative name should be traded with caution. He advised investors to buy in small increments, not to use market orders, and certainly not to pay up for the stock. He urged investors to wait for a good entry point.
Speculation Friday
For this weekly segment, Cramer highlighted
Sun Hydraulics (SNHY Quote) as another fluid dynamics stock that he said is on the rise. He credited
BusinessWeek's "Hot Growth Stocks" list for first alerting him to the name.
Cramer said he's returning to the fluid dynamics group because they're making money. He credited Sun for simply making a better valve, something greatly needed in oil rigs and other industrial applications.
He said Sun also has great international exposure, with 50% of the company's sales overseas. Domestically, Sun now has a 17% market share of a billion-dollar market, with many new innovations to come.
On a valuation basis, Cramer said Sun is cheap. The stock trades at just 17.5 times its forward earnings with a 23.5% long-term growth rate. The company only has three analysts covering it, and Cramer said the balance sheet is clean, the company carries only a little debt and he feels this $38 stock has the potential to reach $48 a share.
"When is comes to the best valves, you want Sun Hydraulics," he said.
Second Thoughts
Recently, Cramer was stumped by two lightning round stocks:
Linn Energy (LINE Quote) and
Brigham Exploration (BEXP Quote). After doing the homework on both names, he followed up with his opinions.
Cramer called Linn Energy a pretty good stock. This conservative driller has a large dividend and is at the tail end of a turnaround, he said.
Because of its inconsistent results, he said he'd stay away from Brigham Exploration and wait for a pullback before he'd buyer of this name.
Lightning Round
US Bancorp (USB Quote),
Sociedad Quimica (SQM Quote),
Agnico-Eagle Mines (AEM Quote),
Yamana Gold (AUY Quote),
Otter Tail (OTTR Quote),
Northrop Grumman (NOC Quote),
EMC (EMC Quote),
AK Steel Holding (AKS Quote),
Reliance Steel (RS Quote),
United States Steel (X Quote)
and
Nucor (NUE Quote).
Cramer was bearish on
Barrick Gold (ABX Quote),
Winnebago Industries (WGO Quote),
Corn Products International (CPO Quote)
and
Starwood Hotels & Resorts (HOT Quote).
Want more Cramer? Check out Jim's rules and commandments for investing by
clicking here.
For more of Cramer's insights during the Lightning Round, click here.