Cramer's 'Mad Money' Recap: Playbook for a Bottom
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"What do you call a 600-point swing to the upside after retesting a low?" Jim Cramer asked viewers of his "Mad Money" TV show Wednesday. "A bottom!" he replied.
Cramer reminded viewers that no one ever made a dime panicking, and now is the time in the cycle when the laggards become winners again. Cramer said the financials and retailers will lead the charge higher from here.
Investing Off a PlaybookIn times of high volatility, Cramer suggests investors have a list of stocks to buy, one that they can execute at the appropriate time. With this playbook, investors avoid the common mistake amateurs make when they sell low and buy high during wild market swings, he says. Cramer also says it pays to look for companies with proven track records that don't represent earnings risks. Two stocks on the buy list, Cramer says, should be IBM (IBM) and DuPont (DD). Cramer said these two stocks are the safest industrials to buy. IBM, Cramer notes, reported a stellar quarter last Friday, beating estimates by 12 cents a share. In a better market, he says, the stock would be at $120 a share. Cramer said he likes IBM for several reasons, including the company's strong international growth, its $118 billion backlog, and its strategy of making small, strategic acquisitions when the market timing is optimal. Cramer likes DuPont because it also beat estimates by 8 cents a share and reaffirmed its guidance for fiscal 2008. He notes that there is a lot of room for analysts to upgrade DuPont in the near future. Cramer also likes DuPont's 3.8% dividend yield and its stock buyback. DuPont, he says, works because of its overseas growth. He recommends buying the stock on any signs of weakness.
Am I Diversified?In this segment, the first caller listed Boeing (BA), Transocean (RIG), Potash (POT), Shaw Group (SGR) and Apple (AAPL) as his top holdings. Cramer liked all of those companies and said this portfolio was diversified. The second caller's portfolio included CVS Caremark, Corning (GLW), Tidewater (TW), Clorox (CLX) and Freeport-McMoran (FCX). Cramer called this portfolio "absolutely perfect!"
Hudson City Bancorp CEO Bullish on Rate CutCramer once again welcomed Ronald Hermance, CEO of Hudson City Bancorp (HCBK) to the show. Hermance said the recent Federal Reserve rate cut helps Hudson City in two ways. First, by lowering its mortgage rates Hudson is now able to issue more mortgage loans. Second, the company is enjoying higher margins on its deposits because of the cut in the fed funds rate. Those margins reflect what the bank pays in interest to borrow money and the interest it receives off the loans it makes. Hermance also told viewers that Hudson is indeed refinancing mortgages and that it wrote off only $105,000 worth of bad loans last year. Cramer said Hudson City is still a buy at under $20 a share.
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