Cramer's 'Mad Money' Recap: The Hideous $6 Billion Tax Rebate
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Jim Cramer told viewers of his "Mad Money" TV show on Friday that the recent decision by Congress to give a $6 billion tax rebate to the country's largest homebuilders is "a conspiracy that's sabotaging the value of your home."
Cramer called the decision a "big mistake" because it's giving money away to the very group that helped create today's housing crisis. "If you're looking for someone to blame for the housing crisis in this country, the homebuilders should be at the top of the list," he said.
Cramer: Stagflation? Whatever
Sticking With Schering-PloughCramer once again welcomed Fred Hassan, Chairman and CEO of Schering-Plough (SGP), to the show to discuss the ongoing controversy surrounding the company's anti-cholesterol drug Vytorin. Cramer said Schering-Plough, which he also owns for his Action Alerts PLUS portfolio, earlier this week announced it would cut costs by $1 billion, on top of a previously announced $500 million in cost cuts. He said Schering's stock now trades at just 9.7 times the new greatly reduced earnings estimates after it was crushed by the negative Vytorin news last weekend. He also noted that Schering still has the second highest number of expected drug approvals between now and 2012. Hassan said he saw the groundswell surrounding Vytorin as a natural, emotional reaction to the negative news, adding the truth is now starting to come out. He said that it's difficult to comprehend the panel's reaction to what he calls a non-scientific study or the resulting negativity. "Patients should stay on their meds," he said. "There is no science behind these few, vocal critics." Hassan also reminded viewers that he is committed to shareholder value. In addition to the aggressive cost cutting, he said the company still has over $15 billion in sales from other products. Cramer reiterated his buy on Schering-Plough, saying that while he may not have called the exact bottom in the stock, it continues to be a great company with sizeable potential. "I'm sticking with Schering," he said.
A Porfolio for the TimesCramer unveiled a new, diversified dividend portfolio for investors. In "a period of incredibly low interest rates," he advised investors not try and hit home-runs with their stock picks, but instead just try and get on base. The new portfolio includes Dow Chemical (DOW), with a 4.2% yield and 65% of its business residing outside of the U.S. It also includes Permain Basin Royalty Trust (PBT), a U.S. Energy Trust split 50/50 amongst oil and natural gas, yielding 9.8%. The third stock in the portfolio is World Wrestling Entertainment (WWE). With a 7.8% yield, Cramer said this entertainment giant is a steal. Fourth is CPFL Energia (CPL), the Brazilian electric utility yielding 5.9%. The fifth is HCP (HCP) with a 5.2% dividend yield. Altogether, Cramer said this portfolio yields three times that of the S&P average, which translates to a 4.7% yield after taxes. "In a low-growth world, we want stocks with stability and consistency," said Cramer. "That's why these stocks are perfect for your 401k."
Mad MailCramer told a new investor that that the first $10,000 of his portfolio should be invested in an index fund, and not in individual stocks. Afterward, he said, investors should stay away from speculative stocks like Darling International (DAR) and stick with stable stocks like Goldman Sachs (GS).
Lightning RoundCramer was bullish on Goldman Sachs (GS), Urban Outfitters (URBN), VF Corp (VFC), Jones Apparel (JNY), Target Corp (TGT), Potash (POT), Mosaic (MOS), Agrium (AGU) and Southwestern Energy (SWN). Cramer was bearish on China Finance Online (JRJC), Merrill Lynch (MER), Tata Motors (TTM), Best BUY (BBY), Cherokee (CHKE), Terra Industries Inc (TRA), Southwest Airlines (LUV), Vasco Data Security (VDSI), ING Group (ING) and Riverbed Technologies (RVBD). Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.
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