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The market soared on Thursday -- ironically on the reassuring words of
Chairman Ben Bernanke, the same man largely responsible for the recent selloff in commodities.
Jim Cramer told viewers of his "Mad Money" TV show Thursday that now that the market has rebounded, it's time to pick through some rubble and look for value in commodities.
Two commodity stocks that Cramer likes are
These two stocks are even cheaper than they appear on paper.
"How do you hide value?" he asked. "Two words: special dividends." Both Nucor and Freeport have a history of paying special dividends, he added.
New Orleans-based Freeport, which owns the largest gold mine on Earth, sells concentrates of copper, gold and silver.
The company has paid out $2.25 in special dividends made in separate payments since December 2004.
In addition, Freeport has 36.5 billion pounds of copper, 39.3 million ounces of gold and 115 million ounces of silver.
"This stock is not expensive," Cramer said. In fact, given their assets, Freeport is a cheap stock.
Nucor also is a gift horse, he said. It paid out a $1.50 in special dividends in the past year. The company, which engages in the manufacture and sale of steel in the U.S., has $2.22 billion in cash.
And according to the company, it is using its cash to buyback its stock.
In addition, raw material prices are not rising as highly as Nucor expected. Right now the stock is cheap, Cramer said.
"We like companies that have good habits like paying special dividends," he said. "And these two are my favorites for the special dividends."
also tends to pay special dividends, but this stock is up 13%, so Cramer did not recommend buying it.
When a caller asked Cramer's opinion about
, he said that because this company manufactures special steel that is used in aerospace, Cramer will give it one thumb up.
Please, Sir, We Want Some More
It's time to go to the poorhouse, Cramer said. The stocks in the poorhouse were all down today.
"When things are bad, we look for opportunity, Cramer said. "And when things are good, we guard against disaster."
When market players are preparing for the expectation of a hard landing, they should go to the poorhouse because the trick is to buy inferior goods, which are goods that you buy more of as you make less money, he said.
We are talking about inferior goods, not inferior stocks, Cramer emphasized.
The three best plays in this area, according to Cramer, are
Dollar Tree Stores
St. Louis, Missouri- based Ralcorp, which makes cheaper brand food, is a real trade-down play, and a stock for a rough economy, said Cramer.
As people become poorer, they're going to be buying inferior-brand private-label food, Cramer said, adding that the company just reported a better-than-expected quarter.
Perrigo is the largest maker of generic over-the-counter drugs in the world. The company just received approval to make a generic version of
Dollar Tree is the best house in the dollar-store neighborhood, Cramer said. Dollar stores are places of last resort when times get tough.
"I'm not saying that we're in for a hard landing," he said. "But it is good to be prepared for the worst just in case." These three are buys, he added.
"When a company borrows money to buy back stock, it is the kiss of death," Cramer said. These stocks eventually get hammered, he said.
This recently broke
, which he owns for his charitable trust
Action Alerts PLUS, and
, Cramer said.
And he believes that it could happen to
because it's about to do the same thing.
These companies understand their own businesses, but they don't understand Wall Street. Cramer said he likes buybacks, but not with borrowed money. He advised people to stay out of a company that is issuing convertible bonds for two weeks.
Convertible bonds, Cramer said, are bonds with very low interest rates that turn into common stocks if the stocks appreciate. They destroy shareholder value, he said. These pieces of paper are dogs.
Buybacks spell trouble. Retail investors don't buy them because of low yields, Cramer said
( IMGC) CEO Glenn Epstein to the show.
Intermagnetics was sold today to
. Epstein said everybody involved in the bid benefited from the transaction.
"Our numbers have been great in all my six years as CEO," Epstein said. "But as the medical-device sector went out of favor, we went with it."
Next, Jack London, CEO of technical-services company
, which specializes in the defense sector, joined the show.
When Cramer asked London to explain the cost differential between bringing in Caci vs. bringing in army, the CEO said there is no continuity cost or continuous cost because the company goes in to do the job; and after its done, it leaves.
In March, the company won the biggest contract in its industry, Cramer said, adding that he likes Caci, and it saves the army money.
To view Cramer's interviews with Epstein and London, click here.
Cramer was bullish on
Jacobs Engineering Group
Four Seasons Hotels
Cramer was bearish on
Chicago Bridge & Iron
Brookfield Asset Management
( BRNC) and
For more of Cramer's insights during the most recent Lightning Round, click here.
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At the time of publication, Cramer was long Network Appliance, Microsoft, Foster Wheeler, Halliburton, Nabors Industries and Anheuser-Busch.
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