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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Cramer's 'Mad Money' Recap: Betting Against the Bears (Final)

Stocks in this article: COGISRGSDALNYJBHTKMPALLT

AT&T's Banner Year

Cramer kicked off the new year with a week-long series entitled the "Diamonds of the Dow," his top picks from the Dow Jones Industrial Average for 2012.

His first pick was in telco, as he compared AT&T (T), a stock which he owns for his charitable trust, Action Alerts PLUS , to rival Verizon (VZ).

For 2011, Verizon was the clear winner, advancing 12.1% versus AT&T with a scant 2.9% thanks to its failed merger attempt with T-Mobile. But in 2012, Cramer said he's betting on AT&T to play catch up, naming the company his first diamond for the year.

On a valuation basis, AT&T is more promising, said Cramer, trading at just 12.3 times earnings versus Verizon at 15.7 times earnings. The dividend edge also goes to AT&T, with a 5.7% yield versus 5% for Verizon. But the good news for AT&T, said Cramer, is that the T-Mobile fiasco is now over.

With the merger now out of the way, Cramer explained that AT&T can now focus its energies on building out its 4G network and adding to its spectrum through smaller acquisitions as it did late last year when it purchased spectrum from Qualcomm (QCOM). Cramer also noted that many investors expected AT&T to lose out when Verizon began carrying the iPhone, but that simply hasn't happened.

Outside of wireless, Cramer said there's also lots to like about AT&T. For example, the company's legacy wireline business actually did well in 2011, as did its high-speed Internet and TV network Uverse, up 19%.

Taking into account all of these factors, Cramer said he expects AT&T to play catch-up in 2012, which is why it's his top Dow pick for the new year.

Stock Super Bowl Kickoff

In a new "Stock Super Bowl" series, Cramer pitted two of the top players in the S&P 500 against each other in a play-off match to see who will compete against the best player in the Nasdaq on Thursday. Tonight's contenders were Cabot Oil & Gas (COG), which delivered a 100.5% return last year, against Intuitive Surgical (ISRG), which returned 79.6%.

Cramer said on the surface in might seem difficult to compare a company that makes surgical robots with one that drills for oil and gas, but some stock metrics apply across all sectors, and one of those metrics is the PEG ratio, which compares a stocks P/E multiple with its growth rate. Cramer never advocates buying a stock with a PEG ratio over two, which is why in this round the edge went to Cabot, with a PEG ratio of just 0.9 vs. Intuitive with a PEG ratio of 1.7.

Cramer's next metric was takeover potential. He said that Intuitive is too large and rather specialized to be a big takeover candidate, but Cabot is ripe for the picking, especially given all of the merger activity in the oil and gas space.

Next up was what Cramer called "home-run" potential, the ability of a company to surprise investors with a big upside surprise. He said that while Intuitive does have some new product roll-outs coming, the advantage once again goes to Cabot, which has the potential to discover even more oil in its already prime oil shale acreage.

Cramer's final metric for the match-up was dividends. He said that while both companies pay a small dividend, the advantage goes to Intuitive, since its recurring cash have been directed towards shareholders, while Cabot's earnings almost already get sent for more and more drilling.

The final score for this play-off match up? Cramer said it's Intuitive Surgical with six and Cabot Oil & Gas with nine, making Cabot the clear winner.

2 of 4

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 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

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