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NEW YORK (TheStreet) -- Before you buy a stock, stop and think about the company's competition, Jim Cramer warned "Mad Money" viewers Tuesday. Cramer said that in today's market competition matters, and those in cut-throat businesses are getting pummeled.
Cramer's theory was clearly evident in Tuesday's trading with companies such as United Technologies (UTX) leading the charge higher. Not only is the company in the red-hot aerospace market, but it's also able to raise its prices and enjoy bigger margins thanks to extremely limited competition.
On the flip side, there's Travelers (TRV), the insurer that's getting hit on all sides as it is forced to compete for business largely on price alone. Shares of Travelers did not fare well in today's trading, noted Cramer.Both Honeywell (HON) and General Electric (GE) did well in the quarter, as did rails CSX (CSX) and Union Pacific (UNP). Cramer also liked banks such as JPMorgan Chase (JPM) and Wells Fargo (WFC), two stocks he owns for his charitable trust, Action Alerts PLUS. Meanwhile, companies with lots of competition, from Coca-Cola (KO) to Microsoft (MSFT), struggled. Even the venerable Google (GOOG) failed to impress investors this quarter. Cramer once again gave the nod to mortgage insurers like Radian Group (RDN) and Genworth Financial (GNW) as they, too, have little in the way of competition.
Should You Buy Sprint?With all of the mergers and buyouts now complete, is the new Sprint (S) worth owning? The analysts are clearly undecided because the company has received various upgrades and downgrades over the past few weeks. Cramer dove into Sprint's fundamentals to discover the truth. Cramer said Sprint is a completely new company now that its Clearwire and SoftBank deals are complete. The old Sprint was a turnaround story, he said, but the new Sprint is a growth story. CEO Dan Hesse is still in charge, and that's a good thing -- but the new company now has more 4G LTE spectrum than all of its competitors combined. It will likely take Sprint up to a year to fully roll out its LTE network, which is why just about everyone expects the current quarter's results to be a disaster, noted Cramer.
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