Cramer's 'Mad Money' Recap: Parade of Positives (Final)
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NEW YORK (
) -- "Remember this day," Jim Cramer told the viewers of his
TV show after a stellar day on Wall Street.
Just last night, Cramer told viewers they needed to have the courage to buy into weakness, and today, those who heeded the call were handsomely rewarded.
Cramer said there was plenty of good news today that led to the market's victory over the bears. First, the markets received positive Chinese manufacturing numbers, signaling that China is still alive and well despite interest rate hikes. Second, the European central banks discussed enlarging their bailout efforts, a huge victory for the bulls.
Next, Cramer said the markets received positive data on hiring, and finally, President Obama continued pressing hard for a compromise bill on unemployment benefits and tax cuts. Cramer said all of these positive factors led to today's wonderful rally.
Cramer once again noted that when something is "obvious" to everyone, it rarely comes true, and that is certainly the case with the assumption that the global recovery is not yet at hand. Cramer said the global economy is picking up, and even the bears can't keep it down any longer.
Cramer said there was strength in many areas of the market today, including the transports, technology and retail. He said the move in the industrial names remains a strong bull area as well.
"Take the gains today, you earned them," Cramer told the viewers that took advantage of last night's advice. "The bears have nothing to show for their sentiments."
Two Ways to Win
"There are still lots of way to make money in this market," Cramer told viewers as he once again highlighted
Airgas
(ARG)
, a company he said gives investors two ways to win.
Airgas has been trying to fend off a hostile takeover bid from rival
Air Products
(APD) - Get Report
for months, leading Cramer to advise selling the company on Nov. 4. But with a recent court ruling that pushes a decision on the deal back until mid-2011, Cramer said the stock of Airgas is once again a buy.
Cramer said the logic is simple. Air Products' low-ball bid for Airgas came at the bottom of its earnings cycle. As the economy heats up, so too does Airgas' earnings, which makes the company more valuable and in turn makes the chances of Air Products' bid being accepted.
Cramer said Air Products' $65.50 a share bid is way too low. He feels the company could earn $4.20 a share in 2012, which pegs the stock at just 14.5 times earnings. Historically, Airgas trades at 17.7 times earnings, and Cramer said the company should sell at a premium to that level. He said Airgas could earn a lot more than just $4.20 a share.
But there's a second way to win, said Cramer. Since the takeover was announced, the stock of Airgas has been stalled, while the rest of the industry has rocketed higher. Cramer said if Airgas remains independent, it's stock is still worth 25% more than it trades today. He pegged the stock to be worth between $77 and $80 a share.
Fashion Trades
Continuing his "Stock-ing Stuffer" series of the best retail stocks, Cramer honed in on the fashion players, recommending two and panning another. He said when it comes to fashion, investors need to look for growth, both the company's ability to open new stores and its ability to incubate new store concepts.
Winning first prize in the fashion show was
Urban Outfitters
(URBN) - Get Report
, a company with just 355 stores around the world and loads of new store concepts including everything from house and garden to weddings.
Cramer said this stock is up over 1,000% since it debuted in 1999 and still has plenty of room to grow. Urban trades at just 19.4 times earnings with a 20% growth rate.
Coming in a close second,
Limited Brands
(LTD)
, which is now best known for its Victoria's Secret brand. Cramer said Limited is aggressively pushing its international rollout, as well as offering a $3 special dividend and a $200 million stock repurchase program. Limited trades at 15.8 times earnings with a 17.5% growth rate.
When it comes to stocks to avoid, Cramer turned toward
Gap
(GPS) - Get Report
, a company with 3100 stores and no room to grow. Cramer said Gap's U.S. sales were weak and its inventory bloated. Gap shares trade at 11 times earnings with an 11% growth rate, making it more expensive when compared to its faster growing rivals.
Am I Diversified?
Cramer spoke with callers to see if their portfolios have what it takes. The first caller's portfolio included
Anadarko Petroleum
(APC) - Get Report
,
Berkshire Hathaway
undefined
,
Caterpillar
(CAT) - Get Report
,
Halliburton
(HAL) - Get Report
and
Wells Fargo
(WFC) - Get Report
.
Cramer identified two of a kind with Anadarko and Halliburton and advised selling one in favor of a healthcare company.
The second caller's top holdings included
Hasbro
(HAS) - Get Report
,
Rackspace
(RAX)
,
MedcoHealth Solutions
(MHS)
,
Bruker
(BRKR) - Get Report
and
Activision
(ATVI) - Get Report
.
Once again Cramer identified a pair in Bruker and MedcoHealth and said the companies were too similar. He advised adding a big machinery company like
Caterpillar
(CAT) - Get Report
.
The third caller had
Apple
(AAPL) - Get Report
,
American Tower
(AMT) - Get Report
,
Annaly Capital
(NLY) - Get Report
,
Teva Pharmaceuticals
(TEVA) - Get Report
and
Verizon
(VZ) - Get Report
.
Cramer said this portfolio was diversified.
The fourth caller's top stocks were
Kinder Morgan Energy Partners
(KMP)
,
ConEdison
(ED) - Get Report
,
Celcom Israel
(CEL) - Get Report
,
First Niagara Financial
(FNFG)
and
Hot Topic
(HOTT)
.
Cramer said this portfolio was also properly diversified.
Lightning Round
Cramer was bullish on
Chevron
(CVX) - Get Report
,
Marathon Oil
(MRO) - Get Report
,
Apple
(AAPL) - Get Report
,
Baidu.com
(BIDU) - Get Report
and
OptionsXpress
(OXPS)
.
He was bearish on
JA Solar
(JASO)
,
BP
(BP) - Get Report
,
Research In Motion
(RIMM)
and
JPMorgan Chase
(JPM) - Get Report
.
Closing Comments
Cramer told viewers to sell half their positions in
Netflix
(NFLX) - Get Report
, a stock that's up 100% over the last four months.
Cramer said while he's still a strong believer in the Netflix story and doesn't buy into any of the bears' arguments against the stock, discipline must always trump conviction. He said by selling half their positions, investors will be playing with the house's money, and cannot lose going forward.
Cramer reminded viewers that bulls make money, bears make money, but pigs get slaughtered. Shares of Netflix are up 269% since Cramer first went positive on Netflix back on Oct. 27, 2009. "It's time to ring the register," said Cramer.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was not long on any stock mentioned.
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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