'Mad Money' Mailbag: Goodyear Tires
Editor's Note: The following are questions received from viewers of "Mad Money," seen every day at 6 p.m. EDT on CNBC.
What do you think about Goodyear Tire(GT Quote)? -- Michael from Indiana James J. Cramer: While this company is far removed from the brink of bankruptcy, I believe the easy money has already been made in Goodyear. The tire business remains very competitive, and the producers are at the mercy of rising energy costs. I prefer Superior Industries(SUP Quote), an aluminum wheel maker, in this space.
This euphoria worries me. I'm once again hearing a lot about investment clubs springing up, which marked the top of the market last time. What do you think? -- Bud from Venice, Calif. Cramer: While I have nothing against investment clubs, I will say that it's often best to sell when you believe market euphoria is about to reach its crescendo. I currently believe the market is slightly overbought, but that retailers, technology, energy and homebuilder/land banks can continue to move higher in the second half of the year.
Why does Microsoft(MSFT Quote), a very profitable company, not trade at the same earnings multiple as Google(GOOG Quote)? -- Ellen from San Mateo, Calif. Cramer: The simple answer is growth. In the mid- to late-'90s, Microsoft was growing in the 40% to 50% range annually. That said, Mr. Softee has gone soft, so to speak. In 2005 it's on track to post its third year of low single-digit growth in the past five.
What are you thoughts on Transocean(RIG Quote) and Schlumberger(SLB Quote)? The oil stocks seem to have cooled off for the moment.
-- John from Washington
Cramer: These are both fine companies, but I prefer Schlumberger at current levels. My favorite name among the service names is still Halliburton (HAL Quote). I own Halliburton for my charitable trust, ActionAlertsPLUS, and believe the market is discounting the value of its KBR division.
Interested in more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here. It's a series of articles from Cramer on how to become a better investor. The following table lists some of the rules that Cramer dissects.
| 1. | Pigs Get Slaughtered | 2. | It's OK to Pay the Taxes | ||
| 3. | Don't Buy All at Once | 4. | Buy Damaged Stocks | ||
| 5. | Diversify to Control Risk | 6. | Do Your Homework | ||
| 7. | Don't Panic | 8. | Buy Best-of-Breed | ||
| 9. | Defend Some Stocks | 10. | Don't Bet on Bad Stocks | ||
| 11. | Own Fewer Names | 12. | Cash Is for Winners | ||
| 13. | No Regrets | 14. | Expect Corrections | ||
| 15. | Know Bonds | 16. | Don't Subsidize Losers | ||
| 17. | No Room for Hope | 18. | Be Flexible | ||
| 19. | Quit When Execs Do | 20. | Patience Is a Virtue | ||
| 21. | Be a TV Critic | 22. | When to Wait 30 Days | ||
| 23. | Beware the Hype | 24. | Explain Your Picks | ||
| 25. | Find the Bull Market | ||||
| Check back for more of Cramer's Rules | |||||
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