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NEW YORK (
) --"Don't throw in the towel," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.
He said surrender is not an option, despite the deluge of negativity around the globe. "Now is the time to redouble your efforts," he said, "and to look for opportunity."
Cramer told viewers not to believe the headlines, which predict luxury retailers will lose out with a strong dollar. He said that
has proven otherwise.
More on Retail 7 Retail Takeover Rumors
Cramer told viewers not to believe that deep-water oil drilling is dead. He said that while it may indeed be dead here in the U.S., Brazil, Russia and China are happy to pick up the slack. He said that failing European debt is not that bad either, as it means more money will flow here to the U.S.
Cramer continued with a laundry list of negatives, including a slowing China, the Obama agenda, events in Israel, Iran and North Korea, and even the negative comments from economics "expert" Nouriel Roubini, all of which Cramer said are not as bad as the headlines appear.
Cramer said it would be a mistake for investors to succumb to this ultra negativity. He maintained his interim target for the Dow of 9,500, and said that if Europe fails, he predicts a slide to 8,260, not any lower. He said that in his 30-year career, it's always been the wrong move to give up when things looked bleak. Just think back to this time last year, when the Dow hovered near 6,500, he said.
Cramer said investors need to stay diversified, keep cash on hand, buy some gold as insurance, and stick with real winners, like
, a stock which he owns for his charitable trust,
. He also advised sticking with high yielding dividend stocks for protection.
Assessing BP's Impact
In the "Off The Charts" segment, Cramer went head to head with colleague Dan Fitzpatrick over the chart of
Oil Service HOLDRs
ETF, as the
oil spill in the Gulf of Mexico rages on. Cramer said the oil service stocks have been getting hammered on the news, but the markets are overreacting, as the Gulf of Mexico is not the only game in town.
According to Fitzpatrick, the OIH could drop as low as $65 a share, down an additional 27%, before beginning to bottom. He said the weekly chart demonstrates a bearish wedge pattern, which shows that each successive move higher since the beginning of the year has been weaker and weaker. This was followed by news of the spill, which caused the ETF to fall below its 40-week moving average.
Fitzpatrick said the OIH daily chart is also bearish. Despite holding on from April 20, when the news broke, until April 30, when the ETF fell below its 200 day moving average, each attempt at a rally has failed miserably.
But Cramer noted that all oil service companies are not created equal, and the OIH slide could be a great opportunity for companies like
, which despite an estimated 4% ding to their earnings from the spill, has seen its shares slide 24%.
Cramer was also bullish on
, another Action Alerts Plus name. Weatherford is also down 24% despite its huge international operations, he said.
Cramer also gave the nod to
, which is largely a land driller, not an offshore driller, and
, another stock caught in the BP crossfire.
Wholesale Club Rematch
In his "In The Ring" segment, Cramer offered up a rematch of wholesale clubs
, an Action Alerts Plus stock. Cramer last pitted the two companies against each other on Aug. 25 and declared BJ's the winner. But have things changed since last year?
Cramer said his recommendation of BJ's was correct back then, with shares rising 25% compared to Costco's 17%, but with Costco's stock now less expensive, he said Costco is now not only cheaper but also has better fundamentals.
Cramer said that Costco now has double the sales per square foot of BJ's, an impressive turnaround. He said that Costco also has more exposure to higher margin private label brands, and has seen its same store sales increase by 10% compared to BJ's 8%.
Foot traffic, another important metric, is also skewing in Costco's favor, with Costco's traffic up a steady 4% a month, compared to BJ's, which has been all over the map. Then, there's membership fees, said Cramer, where Costco is seeing an 87% renewal rate and strong growth, while BJ's memberships are up only 5%.
In last year's review, Cramer liked BJ's for its growth potential given that it has just 186 stores compared to Costco's 527. But this year, Cramer said it's international that matters, and here Costco's prospects are far better than BJ.
Finally, there's price. Cramer said Costco trades at 17.9 times its earnings while BJ's trades at 13.2. This may seem like Costco is more expensive, but Cramer said he's willing to pay up for best of breed, and Costco's $12 per share in cash on its books.
Cramer called the fight a technical knockout, with Costco winning on every metric that matters.
In his "Eureka Moment," segment, Cramer likened the U.S. government to that of U.S. homeowners, who got clobbered when their adjustable rate mortgages reset and they could no longer afford their homes.
Cramer said the U.S. government is making the same mistake, borrowing tons of short-term money, instead of locking in slightly higher, but far more stable, long- term debt.
Cramer explained that the biggest financial risk to our country is that of liquidity, just as its occurring now in Europe. He said the country must stand up and fix this situation by refinancing. According to Cramer, demand for U.S. debt is strong, as the U.S. is now the least unsafe place to invest. He said the country should utilize this demand to sell $2 trillion in 20-year bonds.
While the naysayers point out that such a move would cost an additional $150 billion in higher interest payments, Cramer said this is a small price to pay for an insurance policy against a liquidity crisis over the next 30 years. "You sell bonds when people are willing to buy them," he said, "and that time is now."
Cramer was bullish on
Cliffs Natural Resources
Cramer was bearish on
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was long Apple, Weatherford, Costco .
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.