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NEW YORK (
) -- "With so many other places to go, why bother with tech or the banks?" Jim Cramer asked viewers of his "Mad Money" TV show Thursday. Many people want so badly to invest in the beaten-down tech and bank stocks, but he'd rather be in the industrials, if the economy starts growing, and in the food and drug stocks, if it doesn't.
Cramer explained that the tech sector no longer trades monolithically. In the early days of the PC, he said, when tech was first emerging as a secular growth industry and not a cyclical one, this was not the case. Back then, everyone was in growth mode and just about every stock was a winner.
But even in those days, said Cramer, there were still losers, companies that were left behind with each new iteration from PCs to the Internet and from the Internet to mobile, etc. In today's world, there's a glut of PCs, said Cramer, and a glut of many components, all of which makes the tech group very hard to invest in.
has proved, even the best of the best can turn on a dime and be unpredictable for investors. Cramer said that only
, a stock which he owns for his charitable trust,
Action Alerts PLUS, seem to be able to buck that trend, and even Apple has lost some luster after the passing of founder Steve Jobs.
The same principles apply in the banking group. Cramer asked, when even the best bank was only able to deliver a 1% return for the year, why would anyone want to invest there? There's simply not enough business to go around and regulators are nipping at the heels of every profitable business the banks once had.
Cramer reminded viewers that the markets want growth, and in the absence of growth, they'll settle for dividends. The banks and the techs have neither. That notion prompted Cramer to ask, "why bother?" He said that the industrials and the food and drug stocks, while traditionally slow growers, offer dividend protection and may, in fact, grow faster than both tech and the banks for the foreseeable future.
Eat, Drink, Be Merry and Shop
For his "Eat, Drink, Be Merry and Shop" series, Cramer focused on shopping and turned the spotlight on
iShares DJ Real Estate Fund
, a real estate ETF that focuses on not only shopping centers, but also the pickup in apartment and office construction.
Cramer said investors get a lot with the iShares Real Estate Fund. Nearly 20% of the fund is comprised of retail centers, including high-end malls and low-end outlet centers. The fund's largest holding is
Simon Property Group
, an excellent operator, along with
Tanger Outlet Centers
Federal Realty Trust
, two more Cramer fans.
The fund also gives investors exposure to the shortage in office space, with holdings like
, both of which operate in the hottest office markets in the country.
Also in the mix is exposure to the recovering markets in Florida, as well as exposure to the data center and even wireless markets, with holdings like
, our nation's largest cell tower operator that's now a REIT.
Finally, Cramer said that the iShares Real Estate Fund holds some
, his favorite mortgage real estate investment trust. Put all of these great investments together, and Cramer said it's easy to see why this fund should be at the top of everyone's shopping list this year.
For the Thursday "Sell Block" segment, Cramer pitted three electronics retailers against each other to see which one, if any, were worth investing in. The candidates were
, down 35% for the year,
, down 32% this year, and
, off 48% year to date.
Cramer said he has no choice but to put all three of these companies in the Sell Block, as all three are broken companies in an industry that's in secular decline as pressure from online vendors like
Of the three, Cramer said that hhgregg is perhaps the best of the bunch. The company operates just 204 stores and plans to add 20 to 25 new ones next year. But even with that growth, Cramer said it's not enough to stem the decline, as existing same-store sales were up just 1.5% for the quarter. Most of that growth was driven by promotions, he said, further helping to erode margins.
Best Buy is the biggest of the three, with 1,300 locations. But Cramer noted that Best Buy trades on its same-store sales and margin numbers, both of which are awful and getting worse. The company plans on closing some of its locations, but Cramer said it's too little, too late for what has become merely a showroom for products people would rather buy from Amazon. Best Buy squanders its cash on a stock buyback, said Cramer, but even with 18% of its shares retired, nothing has changed.
Cramer said that Radio Shack is the worst of the lot, with 4,500 small-format stores that aim to compete largely in the highly competitive wireless business. Cramer said that Radio Shack does pay a dividend, which is good, but the company has so many other issues, he'd still stay away.
When it comes to price, Radio Shack trades at 8.1 times its earnings but only has a 3% growth rate. Very expensive, said Cramer. Best Buy and hhgregg are better at 6.8 times and 10.2 times earnings, respectively, with a 7% and 10% growth rate. But Cramer said that these multiples are highly questionable, given how vulnerable the companies' earnings are.
Off the Charts
In a special "Off the Charts" segment, Cramer dove into the chart of
, perhaps the last high-growth stock that's still standing. He said this unstoppable company is just off its 52-week high, but what does the chart tell us about the company and the market overall?
For a better perspective, Cramer asked four of his chartist colleagues to take a look. According to Ed Ponsi, Hanson's chart shows a consistent pattern of bouncing off its 100-day moving average, a bullish sign. But John Roque said this "pretty girl" growth name is showing some signs of slowing. Dan Fitzpatrick noted four breaks below its 50-day moving average, all on high volume, a sign that big institutions are dumping the stock. Finally, Tim Collins said that Hansen's chart is throwing red flags that the momentum may be coming to an end.
Cramer said the market seems to be rewarding Hansen because, unlike many other high-fliers, Hansen is a consumer staple company, making primarily energy drinks and natural sodas. The company also dominates its category, but is the momentum over?
Cramer noted that Hansen trades at 24 times earnings, with a 14.5% growth rate. He said the company does demand premium pricing for its drinks, but if the company ever stumbles, the market will show no mercy. Cramer also said that operating margins declined last quarter, which is not a good sign, and the U.S. market appears to be leveling off. For Hansen, international growth is an opportunity, he said, but that growth will be pricey.
With shares of Hansen flirting with their 52-week high, Cramer said it's too risky to pick up shares of Hansen, especially with three out of four technicians all seeing warning signs in the charts.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer answered the question of what stocks work if Europe is able to kick the can down the road far enough to where it's no longer a problem. He said that for many, the techs and the financials seem to be the logical choice. But the financials have other problems, he said, and tech does as well. So what's next on the list?
Cramer said he likes the energy stocks, particularly the oil drillers, as oil is now back above $100 a barrel and companies will spend fortunes finding more at those levels. He said that
, an Action Alerts PLUS name, both work, as do the oil shale players like
In the Lightning Round, Cramer was bullish on
Cramer was bearish on
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long AAPL and ESV.
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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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.