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"Sometimes companies shoot themselves in the foot," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.
He said that's what happened to
, a stock he owns for his charitable trust
Action Alerts PLUS, when it reported its earnings earlier Wednesday.
Cramer's been a long-term supporter of Foster Wheeler, which has risen 92% since he recommended it on April 16, 2007.
Cramer Interviews Foster-Wheeler CEO
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According to Cramer, Foster posted stellar earnings in the past quarter. The company's earnings per share came in at 85 cents, 12 cents above consensus estimates. Revenues rose to $1.8 billion, up from $1.4 billion in the previous quarter. Most impressive was Foster's backlog, which now totals $8.9 billion, almost equal to that of the company's entire marketcap.
But all that took a back seat when Ray Milchovich, the company's CEO, mentioned the company's weak North American power business during the conference call. Cramer welcomed Milchovich to the show to clarify his remarks.
Milchovich expressed his frustration about the conference call because just about every question focused on Foster's power business, which accounts for just 9% of the company's revenue.
He said that all of Foster's other businesses, including LNG, refining, chemicals and petrochemicals, have been and continue to be "extremely robust." He noted the company's strong bookings in every division.
Milchovich also said that he does not see any U.S. energy solution that doesn't include coal as a baseline energy source. He also said the company's weak U.S. power business represents only "delays" in what he sees as a still growing business.
Cramer said Milchovich has never steered him wrong, and he doesn't feel Foster Wheeler is falling apart in the least.
Getting Whiffed on Schering-Plough
During this week, Cramer has talked about some of his blown calls and used them as a vehicle to help viewers learn from his mistakes. On this show, he talked about how he missed the top in
( SGP), a stock he also owns for
Action Alerts PLUS, on May 14, 2007.
At the time, Cramer was up almost 100% with his recommendations of Schering and his support of the company's CEO, Fred Hassan. Cramer said he blindly reiterated his buy on the stock on May 14 at $31.95 a share.
"Since then, this stock has been hammered and hammered mercilessly," he said. At its low, Schering was trading at just $13 a share after negative press reports emerged about the company's anti-cholesterol drug Vytorin.
Cramer explained that after the news broke, he mistakenly assumed the market wouldn't overreact to the news. Yet day after day, the stock just kept going lower.
Cramer said he also underestimated the power of
The New York Times
and its extensive coverage of the controversy.
Cramer said he also gave too much credit to Hassan, who purchased $2 million of Schering's stock at $18 a share just days after the news broke.
He said he never considered just how much the market and the media would over-react to this news.
"But my real mistake was greed," said Cramer. Despite recommending Schering at $16, he did not take a profit when the stock hit $31. Cramer said that rule No. 1 in his book is and always will be "bulls make money, bears make money, but pigs get slaughtered."
Going forward, Cramer said Schering-Plough is a buy at these prices. He said the company is much more diversified than it previously was and feels that such hostile negative news won't be repeated.
Am I Diversified?
Cramer played "Am I Diversified" with callers to see if their portfolios have what it takes.
The first caller's portfolio included
Cramer said this was a great high-yielding portfolio.
The second caller's top holdings included
Cramer said Rite-Aid, Sirius and Cal-Maine were speculative stocks and he wanted to see changes made. He suggested adding a defense and healthcare stock to the portfolio.
A Strong Report Card
Cramer once again welcomed David Pyott, Chairman and CEO of
to discuss his company's outlook.
Pyott said his company has a great story to tell, with sales up 23% year over year, earnings per share up 15%, and R&D spending up by 32%.
When asked about the company's slumping Botox sales domestically, Pyott focused on the drug's strength in overseas markets. He also said Botox is only one part of the company's portfolio and accounts for just 10% of its sales.
Cramer said Allergan is cheap, trading at just 17 times its earnings. He told viewers "this is your change to buy it cheap."
Cramer was bullish on
Cramer was bearish on
In the Lightning Round, Cramer was bullish on
Sirius Satellite Radio
World Wrestling Entertainment
Cramer was bearish on
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At the time of publication, Cramer was long Foster Wheeler, Verizon, Altria and Schering-Plough.
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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