Cramer's 'Mad Money' Recap: Unlocking Altria's Hidden Value
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Investors need to get into defensive stocks to protect themselves from the "most treacherous market I've seen in 29 years of trading," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.
Cramer says investors need companies that can sell products in a recession, and ones that are protected from rising raw costs. He recommends stocks with dividends and share-repurchase programs to limit downside risk.One such stock he likes is Altria (MO), which Cramer owns for his charitable trust, Action Alerts PLUS. Altria is up 11% since the market peaked on Oct. 11 and sports a 3.8% dividend yield, both of which Cramer finds attractive. He says the company will unlock tremendous value when it splits its business into separate domestic and international tobacco companies. Cramer expects the company to make an announcement regarding the breakup within the next two weeks, saying the transaction could happen as early as this quarter. Cramer also sees value in Altria's 28.6% stake in SABMiller, a "hidden asset" that he says most investors may not be aware of. He expects Altria to use proceeds from the sale of SABMiller to either boost the company's dividend or bolster its stock buyback program. Bottom line, Cramer says: "Just own Altria."
On the Road to RecoveryCramer identified another beaten-down tech stock that he believes is on the road to recovery. The company is ADC Telecommunications (ADCT), a stock that he recommended on Dec. 18, at $17.72 a share. Since then, the stock has gone nowhere, closing Wednesday at $13.52. Cramer said the company provides equipment to both telecom and cable companies to build out their next-generation networks. Cramer has been a fan of Verizon's (VZ) new FiOS fiber optic network and says companies like ADC that supply Verizon should continue to deliver solid earnings. ADC trades at just 10.4 times their earnings, but is growing at 8%, and that makes it just too cheap, according to Cramer. He expects ADC could rise as much as 60% as analysts realize the estimates for ADC are too low. Cramer says the company just needs to meet expectations to be rewarded by the market.
Checking In On Foster WheelerCramer welcomed Ray Milchovich, chairman and CEO of Foster Wheeler (FWLT), to the show for an update on the company's business. Milchovich said the company's business is not at all affected by the daily spot price of oil because all of its projects are long term. He also said the company has not received any cancellations for current or future projects and that the basic fundamentals of its business remain strong. Cramer said he would be a buyer of Foster Wheeler if it goes under $122 a share.
Am I Diversified?In the "Am I Diversified" segment, a caller had Coca-Cola (KO), Microsoft (MSFT), Halliburton (HAL), Raytheon (RTN) and Altria (MO) as his top holdings. Cramer blessed the portfolio as diversified and said the caller "came to play!" The second caller had Microsoft (MSFT), Duke Energy (DUK), Wells Fargo (WFC), Dow Chemical (DOW) and ConAgra (CAG) in their portfolio, and Cramer also blessed this portfolio as right for this market.
Lightning RoundIn this segment, Cramer was bullish on GigaMedia (GIGM), Jakks Pacific (JAKK), Oracle (ORCL) and Sabesp ADS (SBS). Cramer was bearish on Countrywide Financial (CFC), TrueBlue (TBI), Fortune Brands (FO) and Taseko Mines (TGB). Want more Cramer? Check out Jim's rules and commandments for investing clicking here. For more of Cramer's insights during the Lightning Round, click here.
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