Cramer's 'Mad Money' Recap: Routing the Short-Sellers
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"There's an epic battle going on in the markets," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.
Donning rose-tinted glasses, Cramer said that while the bulls may have won today's fight, the battle continues to rage.
Cramer: Opportunity Knocks for Banks |
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Returning to a thesis that he first discussed last month, Cramer reiterated how the Securities and Exchange Commission's decision to rescind the "uptick" rule early this year has given short-sellers the ammunition to force stock prices lower at the expense of average investors.
According to Cramer, taking away the uptick protection is like giving hedge funds and short-sellers a "Gatling Gun" to mow down any stock they see fit.
Cramer said there was one bright spot in the war against the bears:
Lehman Brothers'
( LEH) surprising secondary offering, which fetched $4 billion of additional capital for the firm.
"Up until now," Cramer said, "the financials have been running on credit and credit is a lousy weapon in this war." But with Lehman's new found capital, the company should no longer be vulnerable to the "bear raids" that have been plaguing much of the sector.
Bottom line: Cramer said investors should "enjoy the rally," but remain cautious, because without the uptick rule, the bears are likely to strike again.
A Sunny Outlook
Cramer said there is nothing sexier than a company taking control of its own destiny and transforming itself to succeed in a new economy. That's why he's recommending
Applied Materials
(AMAT) - Get Report
, a stock he has hated for years.
While he is still not a fan of the semiconductor business, Cramer said Applied Materials has a secret that Wall Street hasn't noticed yet: its blossoming solar business.
Applied Materials recently announced a $1.9 billion order for a gigawatt solar facility. The order underscores the company's CEO belief that the solar business is the greatest opportunity his company has ever seen.
Cramer said momentum is starting to build in Applied Materials, which he noted is flush with cash, as much as $2.28 a share, for continued investment in solar ventures.
He likened Applied Materials' prospects to that of
Cypress Semiconductor
(CY) - Get Report
a year before it spun off its
SunPower
(SPWR) - Get Report
solar division.
Cramer says Wall Street still values Applied Materials as a semiconductor equipment stock, but as news of the company's solar division continues to surface, he sees up to 50% in upside potential.
Land Drilling Resurgence
"We are at the beginning of a new land rush in natural gas," said Cramer. That's why he's changing his position on
Nabors Industries
(NBR) - Get Report
, a stock which he has disliked for more than three years.
"It's comeback time," said Cramer, who now predicts U.S. land drillers will become good investments. And he said, "Nabors is the way to play." However, he said the company will likely see one more bad quarter before it truly bottoms.
According to Cramer, Nabors has 89 idle drilling rigs that are currently idle. These rigs, which account for almost a quarter of Nabors' fleet, should soon see deployment as companies such as
Chesapeake Energy
(CHK) - Get Report
and others ramp up domestic gas drilling operations.
"Nabors will make a killing once these rigs are contracted out," he said.
Cramer also likes Nabors for its valuation, noting that the company trades at just 9.1 times its earnings, which makes it the cheapest in the group. Given a more suitable valuation, Cramer said Nabors could see $48 a share.
According to Cramer, Nabors is good enough to unseat
Transocean
(RIG) - Get Report
as his favorite oil and gas driller.
A Healthy Outlook
Cramer welcomed David Snow, Chairman and CEO of
Medco Health Solutions
(MHS)
for an update on the company's outlook.
The stock is down 11% since Cramer's last recommendation in September.
Snow said that his company is coming off of a phenomenal sales year. He said the company sold over $5 billion of new business and sees over $90 billion of branded drugs going off patent in the coming years. The company also raised its guidance by 5% on last conference call.
When asked about recent changes to Medicare's Part B program, Snow responded by saying that Medco will not be adversely affected by the changes. He also noted the company's stock buyback program has $2 billion of shares left to buy and the company is actively buying shares at these low levels.
Cramer called Snow a winner and said recent downgrades of Medco Health were just uncalled for.
Sudden Death
Cramer was bullish on
Tidewater
(TDW) - Get Report
and
Frontline
(FRO) - Get Report
.
He was bearish on
SCP Pool
(POOL) - Get Report
and
Dryships
(DRYS) - Get Report
.
Lightning Round
In the Lightning Round, Cramer was bullish on
Pepsico
(PEP) - Get Report
,
Coca-Cola
(KO) - Get Report
,
General Mills
(GIS) - Get Report
,
Kellogg
(K) - Get Report
,
HJ Heinz
(HNZ)
,
Consolidated Edison
(ED) - Get Report
,
Verizon
(VZ) - Get Report
,
Gushan Energy
( GU),
Intuitive Surgical
(ISRG) - Get Report
,
AstraZeneca
(AZN) - Get Report
,
Hudson City Bancorp
(HCBK)
,
JPMorgan Chase
(JPM) - Get Report
,
Goldman Sachs
(GS) - Get Report
,
Sirius Satellite Radio
(SIRI) - Get Report
,
CSX Corp
(CSX) - Get Report
and
Triple-S Management
(GTS) - Get Report
.
Cramer was bearish on
Cal-Maine Foods
(CALM) - Get Report
,
Time Warner
(TWX)
,
Harley Davidson
(HOG) - Get Report
,
Zimmer Holdings
(ZMH)
,
Stryker
(SYK) - Get Report
,
Rite Aid
(RAD) - Get Report
,
Capital One Financial
(COF) - Get Report
,
Onyx Pharmaceuticals
(ONXX)
,
YRC Worldwide
(YRCW) - Get Report
,
Ford Motor
(F) - Get Report
and
Genesis Lease
( GLS).
Want more Cramer? Check out Jim's rules and commandments for investing by
.
For more of Cramer's insights during the Lightning Round, click here
.
At the time of publication, Cramer was long Goldman Sachs.
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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