This article was originally published Feb. 5
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"While America means politics, China means business," Jim Cramer told viewers of his "Mad Money" TV show Thursday.
He said while President Obama and Congress fight over what so far has been an utterly disappointing stimulus package, the market is paying attention to a much more important one from China.
Cramer called Obama's stimulus plan "a complete and utter disappointment," saying the bill was far too small to do any good. He said the measure delivered a meager $30 billion, far short of the $300 to $400 billion of infrastructure projects that was promised.
But while Congress bickers, Cramer said the Chinese leadership is being responsible, investing over $40 billion on upgrading the country's telco system alone. This is leading stocks like
higher, along with many of the oil, minerals, agriculture and rail stocks.
Cramer noted strength in the Baltic Dry Shipping Index as one of the first signs of a Chinese recovery. He said with the Chinese stock markets already up 15% for the year, he sees demand for steel and iron ore to be one of the first areas to recover.
Cramer said he's keeping his eye on stocks like
, all of which should be early benefactors of the looming Chinese recovery.
Cramer: On Selling Winners
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In this weekly segment, Cramer went back to school and took a closer look at the online education stocks. He examined the chart of
to see if that stock is making the grade.
Cramer said the trend towards online education has been roaring along for months, but he's now getting worried. He said while it's true people who can't find jobs go back to school in ever increasing numbers, he said the charts are telling a different story.
Cramer said the chart of Apollo is being to look ''toppy,'' a term meaning the stock is running out of steam. The stock has put in a double top, with the second top achieved on lighter volume, meaning there's no one left to buy as the value investors being to head for the hills.
Turning to the fundamentals, Cramer said much of the benefit from the recession is now baked into the stock. In an examination of a basket of 10 online education stocks, he sees growth of 22% in a time when the
Dow Jones Industrial Average
declined 30%. With many of these names now trading at a 29 multiple, Cramer said time is running out.
Cramer said he's still a fan of
American Public Education
, which caters to the more stable military sector, but he'd be a seller of Apollo, along with
A Stunning Reversal
disappointing earnings numbers, Cramer asked the question "where did all the DVD buyers go?" His answer was a stunning reversal on a once hated stock.
Cramer explained that part of Disney's earnings shortfall was due to the sharp drop in DVD sales that coincided with the tougher economic times. However when asked whether that drop was here to stay, CEO Bob Iger gave pause, and seemed to be unclear on the answer. This led Cramer to begin his own research.
Disney said the average DVD buying household has on average 80 DVDs in their collection, with avid fans collecting an average of 140 discs. But Cramer said a secular change is coming, as more and more Americans are opting to rent, rather than buy, their DVDs, preferring to watch greater and greater numbers online.
Cramer said this trend only favors one stock, and that's
, a stock which he advised selling on Oct. 23 at $20.79 a share, missing a huge 80% swing to the upside.
Cramer said Netflix is the ultimate stay-at-home recession play. Plus, with Netflix now offering online delivery and striking deals with
Xbox, there are more ways than ever to enjoy Netflix content.
Cramer offered a word of caution to investors, saying that Netflix is a warzone between those long and short the stock. He said of the 17 analysts covering the company, only four have buy recommendations, despite shares rising 80% in recent months. Trading at 20 times its earnings with a growth rate of 15%, Netflix still has room to run and he'd be a buyer on any pullback, he said.
In this segment, Cramer told a viewer that selling in
Research In Motion
( RIMM) is likely just profit taking and he's still a buyer of the stock.
Cramer was bullish on
Cramer was bearish on
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At the time of publication, Cramer was not long on any stock.
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