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
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Cramer: A Painful Lack of M&A

Stocks in this article: STIWFCKEYBACETNBEAVGEEMRPHDHRMMMHON

NEW YORK (Real Money) –- When we talk about mergers and acquisitions, we think they run the gamut of industries. In fact, they don't, and the two areas where we have seen no consolidation are the two areas whose stocks are just acting horrendously at this moment.

This makes sense. When there is no consolidation, there's no ability to rationalize and take out costs. Without consolidation, there's way too much competition. Without takeovers, you just can't boost estimates, the lifeblood of all positive stock moves.

Which two industries am I talking about? The banking stocks and the industrials.

I have watched the sickening dribs-and-drabs selloff in the banking group for what seems like ages now. My Action Alerts PLUS charitable trust has watched SunTrust (STI), which reported a terrific quarter, see its shares pretty much give up a few pennies a day, except for the days when it gives up 25 cents or 30 cents. It's totally gut-wrenching.

I look at the stock of Wells Fargo (WFC), and I wonder what happened to that spike to $53 on that fabulous quarter. KeyCorp (KEY), which was knocking on $15's door, now looks like it can slice through $13.

Meanwhile, Bank of America (BAC) got permission to raise its dividend for the first time in seven years -- obviously something that wouldn't have been done if it were about to be bankrupted by the U.S. Justice Department. Yet the stock is now below the level where it had been when the firm had gotten the go-ahead.

We know the degradation is occurring because interest rates on U.S. Treasuries have gone down to the point at which the earnings estimates -- which analysts set when these companies reported a month ago -- are now too high. They are all vulnerable to number cuts.

Here's what's more important, though: This was a group that, before the Great Recession, used to be the subject of endless merger talk. Shares of a bank such as SunTrust couldn't go down like this without prompting the worry that a name such as BB&T (BBT) would take it over.

TheStreet's Jim Cramer talks about his reasons why banks and industrials are not performing well:


WATCH: More videos from Jim Cramer on TheStreet TV | More videos from Jim Cramer

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs