This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Cramer's 'Mad Money' Recap: Takeover Tonic (Final)

Stocks in this article: ARMHCRUSCREE

Market Conundrums

"Expectations matter," was Cramer's lesson to viewers, as he tried to explain how Cisco (CSCO) could report a one-cent-a-share earnings beat and get a 10% haircut, while graphics chip maker Nvidia (NVDA) could report an eight-cent miss, and jump 4.7%.

Cramer said conundrums like these may make the stock market seem maddening, but factor in the markets' expectations, and all becomes clear. He said everyone was expecting Cisco to do well, so when it did, no one noticed. But when Nvidia, a stock that everyone had given up on, did less poorly, ears perked up.

Cramer said he expected Nvidia to report a bad number when he featured it on July 13 as a second half of the year comeback story. With the quarter now behind us, Cramer said Nvidia is now worth buying. He said the expectations may now finally be low enough for the company to beat them, and its consumer business for smart phones and tablets is starting to pick up.

Cramer said Cisco is another story. The stock had run up ahead of its quarter, making it almost inevitable that shares would pull back as CEO John Chambers tempered the enthusiasm. With shares now trading at just 11 times earnings, Cramer said Cisco is now also safe to buy.

Satellite Imagergy Play

"The satellite imagery business is terrific," Cramer told viewers, as he highlighted the sectors only two players, GeoEye (GEOY) and DigitalGlobe (DGI).

Cramer explained that the satellite imagery business, which started as a government necessity, is now a private sector boom town, as new technology is turning imagery into big business for companies like Google (GOOG) and Motorola (MOT), as well as countless others.

Making the business even better, the lack of competition. Cramer said it would take several years and countless millions for a new competitor to surface in this happy duopoly. From judging demand by viewing Wal-mart (WMT) parking lots, to assessing grain output from Russian fields, the possibilities for satellite imagery is limitless.

So which company should investors buy? Cramer said both companies have a ton of cash and incredibly high margins, but the edge goes to DigitalGlobe since that company has two satellites in orbit compared to GeoEye's single satellite.

Cramer said while DigitalGlobe is the better company, it hasn't been the better stock, making it even more appealing. The company is currently trading at a 7% discount to GeoEye. Of the nine analysts covering the company, only six rate it a buy, leaving room for upgrades.

Cramer said even with all DigitalGlobe has going for it, he'd still wait for a pullback before pulling the trigger.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs