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NEW YORK (
) -- Froth is the enemy of good investing, Jim Cramer told the viewers of his "Mad Money" TV show Monday.
When speculators start reaching, buying even the worst of stocks at inflated prices, that's froth, said Cramer. And froth is what caused today's market reversal.
Cramer said he's always encouraged speculation and has eve recommended as much as 20% of your non-IRA portfolio could be in speculative names. But, he said, speculation involves discipline.
, which Cramer has championed in recent days. Cramer said when he saw this stock up another 25 cents at today's open, he knew speculators were reaching, taking the stock too high, too fast. He's sticking by his $20 price target in 2012, but noted that the stock needs to come down before he'd get in.
Cramer said speculation was rampant in
( FRE) and
( FNM) as well. He said speculators are hoping to make a quick buck in these names, despite the fact the Federal Reserve hasn't decided how much money these companies need to repay the government. The common stock could be worthless, said Cramer.
The same is true of
Sirius XM Radio
, a stock which Cramer called "a used lottery ticket." He said it's dangerous to speculate without the facts.
What are some good spec names? Cramer said he still likes the regional banks, those with good balance sheets and those poised to expand as dozens upon dozens of weaker regional banks fail. Cramer likes
Fifth Third Bank
, along with
In technology, Cramer said stocks like
RF Micro Devices
( ADCT) are good stocks to speculate on, but not
, which has an awful balance sheet and is not part of Cramer's mobile Internet thesis.
Cramer said no company wants their stock to fall into single digits, so knowing which ones to invest in is crucial.
Case for Natural Gas
Cramer brought in Jim Hackett, CEO of
to find out why natural gas is getting a bad rap in Washington.
Hackett said that he hopes and expects natural gas will play a foundational role for energy in this country. He said while wind and solar power seems to have the president's ear, only natural gas, along with nuclear, can meet the country's goals for clean energy and energy independence. He said natural gas is also the perfect backup fuel for wind and solar technologies.
Hackett took aim at so-called "clean" coal, saying that it's an unproven technology and may never come into fruition, while natural gas, on the other hand, can begin today and scale easily with demand, all for around the equivalent of $30 to $42 a barrel oil. Natural gas, he said, works for both electricity generation and as a fuel for vehicles, he said.
Turning to jobs, Hackett said expanding natural gas production could create hundreds of thousands of high-paying jobs in this country. He said that 80% of the country's production is done via smaller, independent producers, which would translate into real economic growth.
Cramer continued his support of natural gas as an alternative fuel, and continued to recommend Anadarko.
Cramer said he's looking for the "best of breed" among the discount retailers. Tonight he examined
, purveyor of the TJ Maxx and Marshall's chains.
Cramer said TJX makes its money buying excess inventory from other retailers, then offering it to customers at a substantial discount. He said the model works brilliantly during times of recession, when retailers have excess inventory to sell and consumers need clothes on the cheap.
TJX reported same store sales up 4% in most recent quarter, with inventories down 4% during the same period. With $1.5 billion in cash on the balance sheet, new store openings and a stock buyback program, Cramer said TJX appears to be firing on all cylinders.
That is, of course, until you consider its stock price, said Cramer. Shares of TJX are up 64% so far this year, and 15 of 20 analysts covering the company already have buy ratings on the stock. "Where's the upside," asked Cramer?
According to Cramer, TJX is no longer in control of its destiny, and the stock's best days may be behind it. Even management on the company's conference call lowered guidance and warned of tougher times ahead, he said. The problem? Cramer said TJX benefits by buying distressed merchandise from other retailers. But with the retail sector stabilizing, there simply isn't enough merchandise for TJX to buy.
Cramer said JX also benefited last year from the demise of rival Linens N' Things, an event that's now well priced into TJX shares. Cramer called TJX's conference call one of the worse of the quarter, noting that management offered no hope for improvement in the latter half of the year.
Cramer told a viewer that
People's United Bank
is still a great bank to own as it's poised to assume the assets of failed banks.
He told a second viewer that
would be a good company to own, but only if Washington were to endorse nuclear energy.
Cramer was bullish on
Banco Bilbao Vizcaya Argentaria
He was bearish on
Hudson City Bancorp
-- Written by Scott Rutt in Washington
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At the time of publication, Cramer was not long 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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