Cramer's 'Mad Money' Recap: Stocks With Staying Power (Final)
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NEW YORK (
) -- "We're most likely going to have a happy new year," Jim Cramer told the viewers of his "Mad Money" TV show Thursday. He said the research is in, and the last week of trading for the year is typically a good one for stocks.
Cramer said he analyzed the past 20 years of market action, only to determine that stocks don't do a whole lot during the last few trading days of the year. Why? He said there are a few reasons.
First, Cramer said there won't be any major news released next week. He said the government is on hiatus, and companies usually wait until the first of the year before reporting any news, good or bad.
Next there are the fund managers. Cramer said this cohort is also on autopilot, protecting their gains for the year and riding out the markets until after the champagne bottles are empty.
Finally, there are the analysts, another group that has learned over the years that the last week of the year is not the time to rock the boat with major research or downgrades.
Add all of these facts together, and Cramer said the markets will likely drift slighter higher over the next week. Which is why his game plan is empty until January.
Stocks With Staying Power
What separates a fad from a stock with staying power? Cramer looked into three hot stocks,
Netflix
(NFLX) - Get Report
,
Priceline
(PCLN)
and
OpenTable
(OPEN)
, to find out if these high fliers are for real.
Cramer recalled how in 2000 a company called Webvan, a grocery delivery business, was valued over $1 billion and had 4,500 employees. Two years later, the company was bankrupt, along with scores of other dot.com names. But while Webvan failed, others like
Amazon.com
(AMZN) - Get Report
flourished, and is now up over 1000% from their 2001 lows.
In the case of OpenTable, Cramer said the company has not only the first-mover advantage, but also mindshare, as more and more people now think OpenTable when they think about restaurant reservations. Cramer said OpenTable's subscription model gives the company excellent earnings visibility and as more diners use the service, it only becomes more valuable to restaurant owners. Shares of OpenTable are up 249% since its IPO, but Cramer said this stock still has room to run.
Cramer had similar sentiments for Netflix, a company he's championed for months. Cramer said Netflix has changed the way people watch movies and TV shows, and with no competitors offering a low cost streaming service, its no wonder the company is growing 29% a year.
Finally, Priceline, another transformational company that has changed the way consumers book airfare and hotel reservations. Priceline's name your own price model is second to none, which explains why this stock is up 5121% over the past 10 years. Cramer called Priceline best of breed, and said this stock is also cheap, given its growth rate.
"For a hot stock to stay that way, it needs more than a great trend," Cramer told viewers, as he continued his explanation of the difference between a fad and a stock with staying power. He said a company needs both execution and branding if it hopes to stay alive.
Being a great company means having management that can deliver the goods, said Cramer. That explains why
Apple
(AAPL) - Get Report
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS, is here to stay while Palm, the company that invented the smart phone category but couldn't deliver a product to compete with the iPhone, failed. Cramer said that's also why we shop at
Home Depot
(HD) - Get Report
and
Lowes
(LOW) - Get Report
for home improvement, and not at Builder's Square, a subsidiary of Kmart with 162 stores that went bust in 1997.
Then there's branding. Cramer said everyone knows Red Bull, the energy drink, but few can recall Clearly Canadian, the company that went head to head with
Coca Cola
(KO) - Get Report
and
Pepsico
(PEP) - Get Report
in the 1990s, and lost. Cramer recalled L.A. Gear footwear, which went head to head with
Nike
(NKE) - Get Report
, only to close up shop in 1998.
Which brings us to
Deckers Outdoor
(DECK) - Get Report
and
Sketchers
(SKX) - Get Report
, two footwear makers with very different outlooks. Cramer said Deckers is not a fad. He said the company has built a unique brand, Ugg, and has carved out its own niche. That's why the stock of Deckers is up 350% since Cramer first recommended it on Nov 30, 2006. He called the stock cheap, trading at just 20 times earnings.
Sketchers, on the other hand, is a different story. After recommending the stock over the summer, Cramer reversed course in September, and told investors to sell. He initially liked the company on the strength of its new toning shoes, but after lawsuits called into question the company's claims, and after Nike's entrance into the toning shoe arena, Sketchers has been all but forgotten.
Cramer said Sketchers could become another L.A. Gear, something not unlikely as the CEO of Sketchers
WAS
the CEO of L.A. Gear.
Mad Mail
In the "Mad Mail" viewer feedback segment, Cramer told viewers that if they like
Monsanto
(MON)
, they should consider owning
John Deere
(DE) - Get Report
, a cheaper stock that's better run.
Cramer told another viewer to stick with
Baker Hughes
(BHI)
, although Cramer likes
Schlumberger
(SLB) - Get Report
and
Weatherford
(WFT) - Get Report
, an Action Alerts PLUS name, more.
When asked about
Limited Brands
(LTD)
, Cramer said he's not seasonally inclined to sell the stock, but he is inclined to sell
Thompson Creek Metals
(TC) - Get Report
, a company Cramer called "unproven."
Cramer told other viewers that he would steer clear of the nanotech industry, which has never made any money, but he would invest in the need for clean water using companies like
PerkinElmer
(PKI) - Get Report
.
Are We Too Bullish
With the S&P Oscillator flashing warning signs, Cramer asked the question, "are we too bullish?" Cramer said as soon as he asked that question, bam,
Joann Stores
(JAS)
received a huge takeover bid from a private equity firm. And with other stores like
Bed Bath & Beyond
(BBBY) - Get Report
reporting a blowout quarter, how could investors not stay bullish on stocks?
Cramer said he still believes "there's always a bull market somewhere," and is dedicating his 2011 to continuing to find them.
Lightning Round
In the Lightning Round, Cramer was bullish on
Southwestern Energy
(SWN) - Get Report
,
WABCO Holdings
(WBC) - Get Report
,
Cummins
(CMI) - Get Report
,
Navistar
(NAV) - Get Report
,
Cleveland-Cliffs
(CLF) - Get Report
,
Hasbro
(HAS) - Get Report
and
ARM Holdings
(ARMH)
.
Cramer was bearish on
Chesapeake Energy
(CHK) - Get Report
and
Eastman Kodak
(EK)
.
--Written by Scott Rutt in Washington, D.C.
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.
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For more of Cramer's insights during the Lightning Round, clickhere
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At the time of publication, Cramer was long AAPL, WFT
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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