Jim Cramer's Mad Money Recap
Cramer's 'Mad Money' Recap: Preparing for the Worst
11/28/12 - 07:59 PM EST
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NEW YORK (TheStreet
) -- It's becoming increasingly apparent there will be no federal budget deal by January, Jim Cramer told "Mad Money"
So if the nation falls off the proverbial fiscal cliff, investors need to be ready with a game plan.
Cramer said compromise appears to still be the enemy in Washington, with several congressmen digging in their heels and sticking to their previous vows to never raise taxes, no matter how desperately they may be needed.
He said the current scenario feels much like the passage of the Troubled Asset Relief Program, or TARP, a few years ago, where politicians only got on board with the plan after the market fell by 10% and they realized just how bad things would become.
Cramer predicted the markets will see their first leg lower during the last week of the year as nervous investors liquidate positions ahead of the new tax rules. Afterward, Cramer said, we're likely to see further declines every Thursday as jobless claims begin to rise.
So how can investors protect themselves? Cramer said all stocks will feel the pain of the cliff, but those that will recover first will be those with the biggest gains before the cliff.
He said the housing recovery will continue on, which means stocks like Home Depot (HD)
, Sherwin-Williams (SHW)
and Whirlpool (WHR)
will bounce first, as will the high-yielders like AT&T (T)
and Verizon (VZ)
Be ready to scamper out of the abyss, Cramer concluded, because after the markets fall by 10% or more, these stocks will be the ones to help us recover.
What the Heck?
In his "What The Heck?" segment, Cramer turned the spotlight on Trimble Navigation (TRMB)
, a once-left-for-dead global-positioning company that is now flirting with its 52-week highs and is up over 18% in just the past 30 days.
Cramer said he was amazed at what he found when looking into Trimble because the company is no longer just making commodity GPS sensors like everyone else.
Trimble got smart, said Cramer, and evolved into communications, which then led to data modeling and analytics and finally gave the company an entire suite of software tools to help those in construction and other industries run their operations more effectively.
Trimble has now entered into a joint venture with Caterpillar (CAT)
and its machine control technology is being sold right alongside CAT's biggest equipment. This gives Trimble a competitive edge, noted Cramer, in an industry where there is still plenty of room to grow.
Trimble last delivered an earnings beat of 6 cents a share on better than expected revenue. Shares currently are going for 17.8 times earnings and the company has an 18.3% growth rate.
Cramer said as the number of users of Trimble's installed equipment grows, the company will soon be able to offer software upgrades and improvements, which can only further improve its margins.
Buying Into Kroger
Some sectors are loathed no matter what the economy is doing, Cramer told viewers. For almost the entire duration of "Mad Money," Cramer has panned both the airlines and the supermarkets, with the sole exception of Whole Foods Market (WFM)
, which remains a Cramer fave.
But even in the supermarket business, one where the margins are razor-thin and the competition is intense, Cramer said execution matters, which is why shares of Kroger (KR)
are up 3% for the year while Supervalu (SVU)
and Safeway (SWY)
have fallen 64% and 19%, respectively.
Cramer said Kroger is doing things right and is doing a better job of appealing to value-oriented customers at its 2,425 locations. Kroger is the only grocer to post returns above its cost of capital and the company's same-store sales were up 3.6%. Kroger is also seeing its margins increasing as its taking share from its competitors.
Kroger is the second-largest grocery chain, a fact that's helped both its balance sheet and its ability to grow and expand, said Cramer. The company also sells gasoline at about 50% of its locations, which helps attract customers and keep them.
But perhaps Kroger's biggest advantage is its large penetration of private-label products. Private-label items carry higher margins than branded ones, Cramer reminded viewers, which is helping the company stay afloat in a highly competitive landscape.
Cramer told viewers to avoid buying Kroger ahead of its upcoming results, but as a longer-term stock he said this is one grocery store, along with Whole Foods, that can actually be bought.
In the Lightning Round, Cramer was bullish on
Clean Energy Fuels (CLNE)
and Red Hat (RHT)
Cramer was bearish on
and BP Prudhoe Bay Royalty Trust (BPT)
Am I Diversified?
In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer
to see if investors' portfolios have what it takes for today's markets.
The first portfolio included:
Bank Of Nova Scotia (NBS)
Cramer said this portfolio was great for diversification but he was not a fan of some of the individual choices.
The second portfolio's top holdings included:
Chesapeake Energy (CHK)
Sprint Nextel (S)
Cramer said Nokia and Sprint are both telecoms and he would swap Nokia for Apple.
The third portfolio had:
Bristol-Myers Squibb (BMY)
National Oilwell Varco (NOV)
EZChip Semiconductor (EZCH)
Westport Innovations (WPRT)
as its top five stocks.
Cramer said this portfolio was fabulous just as it was.
The fourth portfolio's top stocks were:
Bank of America (BAC)
American International Group (AIG)
Western Union (WU)
Cramer said this portfolio was too concentrated in financials and advised selling Western Union and Bank of America and adding Apple and Bristol-Myers Squibb.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer explained the significance of ConAgra's (CAG)
Tuesday announcement it is buying private-label food maker Ralcorp (RAH)
Cramer said that for a long time nationally branded items ruled the roost. But in this past recession many of these brands lost some of their appeal. He said private-label items, which once came in simple black-and-white cans and were only sold in low-end stores, became the bread and butter of retailers such as Costco (COST)
With their new hip packaging and better formulations, private-label goods are now in some ways even better than their branded competition.
As the divide between rich and poor becomes ever larger, Cramer said the move towards private label also becomes larger, an irreversible trend that ConAgra saw and capitalized on.
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-- Written by Scott Rutt in Washington, D.C.
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