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NEW YORK (
) -- "Ben Bernanke just shot the biggest competition for stocks,"
TV show viewers on Tuesday.
He said the comments from the
have effectively eliminated Treasury bonds from the investing equation, making high-yield, high-growth stocks the only game in town.
Cramer explained that Bernanke's decision to keep interest rates super-low until mid-2013 virtually wipes out of all the gains from bonds and bank CDs for the foreseeable future. That makes stocks like
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS, all the more valuable, as Apple's current price is extremely low when compared to the growth the stock will be delivering in the future.
On the downside, Cramer said that Bernanke's comments certainly don't fix the morass in Europe, where the "clueless buffoons" don't seem to have a clue on how to fix their countries' problems. Bernanke's comments also don't do much to fix the U.S. government debt and budget situation, he said, although it does give the Treasury more of an opportunity to refinance our country's debt at lower rates.
Cramer said for those who can't handle the pain of a volatile market that can rise and fall hundreds of points in just minutes, now would be a great exit point. But, he cautioned, remember that the alternatives to stocks will be paying next to nothing until mid-2013. Cramer urged investors to stick with high-growth stocks like Apple and those with high dividend yields.
Lesson from Crash of 1987
In the "Off The Charts" segment, Cramer told viewers to never forget the great market crash of 1987 and the lessons it taught us. He explained that the markets had peaked in August of that year, with the
Dow Jones Industrial Average
hovering around 2700. Stocks back then were trading at 40 times earnings, and the Japanese were buying an awful lot of U.S. stocks, he recalled.
Cramer also recalled that the week before the crash was one of the worst week's in stock market history, one that caused him to liquidate his portfolio. Then on that Monday, the market collapsed, down 508 points, a 20% decline. Monday was followed by "terrible Tuesday," where the market continued to sink a full 1,000 points from its highs just the week before.
But Cramer noted that the 1,000-point decline, peak to trough, was with the Dow at 2,600, not the 11,000 we have today. And more importantly, had you bought stocks the Friday before the crash, you would have been making money just one year later. The crash, he said, made stocks even more worth buying, despite being one of the biggest declines in history.
What can investors buy right here, right now? Stocks with high dividends. Cramer reminded viewers that nearly 40% of the total return from the
has come from dividends. A stock with a 6% yield, for example, will double your money in 12 years even if the share price goes nowhere, assuming you reinvest your dividends. That's why Cramer outlined his dividend stock shopping list for Wednesday's trading.
- Cramer said this New York utility yields 4.7% and has consistent earnings.
Enterprise Product Partners
- This pipeline operator yields 6% and just raised its dividend again a month ago.
- Cramer said Verizon's business won't be derailed by a bad economy and the stock yields 5.8%.
- With new drugs in the pipeline, Cramer said Bristol-Myers is turning itself around and has a 4.9% yield.
- Owners of the Red Lobster and Olive Garden chains, Darden will benefit big from falling gas prices, he said. Darden yields 3.7%.
- Another company benefiting from falling energy prices, Kimberly yields 4.4%.
- Cramer said this company has strong earnings and is a play off emerging markets. The stock has a juicy 4.4% dividend yield.
Future of Natural Gas
In the "Executive Decision" segment, Cramer once again spoke with Andrew Littlefair, president and CEO of
Clean Energy Fuels
, a company that disappointed Wall Street with earnings that were a penny a share less than expected.
Littlefair said Clean Energy Fuels is still in growth mode and business is still strong. He said earnings did come in a penny shy, but revenues were up 57% and volumes increased by 26%. The company has 115 fueling stations and is contracted to build 150 more.
Littlefair also noted that the private sector is moving forward with natural gas, despite legislation being stalled in Congress. He said by 2012 the company will have completed 90 new stations including some along the I-95 corridor from Maine to Florida. He said new natural gas engines are coming from engine makers like
and trucking companies and fleets can't wait to get their hands on them.
Cramer said if investors believe, as he does, that natural gas can play an important part in America's energy future, then Clean Energy Fuels remains a great speculative stock.
Cramer was bullish on
Whole Foods Markets
Cliffs Natural Resources
Alaska Communications Systems
He was bearish on
Transports Signal Hope for Recovery
In his "No Huddle Offense" segment, Cramer told investors to watch the transportation stocks as a measure of the world's economic strength. He said the transports measure global demand just as the price of gold measures fear and uncertainty. In 2008, the transports plummeted, signaling the recession ahead. But today, the transports have sold off a lesser amount, giving Cramer more hope for a recovery.
, as the rails have maintained their pricing power, and
, an Action Alerts PLUS name that yields 3.3%.
Cramer said that the tanker stocks, like
Nordic American Tanker
, whose CEO appeared on the show yesterday, are a total disaster. He said after further review, he simply cannot support the company borrowing money to pay its dividend.
Cramer also soured on the airline stocks, which he said will get hit hard if there is any economic slowdown.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Apple, UPS.
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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