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NEW YORK (
) --"Don't get lost in the euphoria of up days like today," Jim Cramer warned the viewers of his "Mad Money" TV show. He said while everything was trading higher today, the fundamentals haven't changed, which is why he continued to recommend selling into strength to have the ammunition needed to buy back in on the next dip.
There are some stocks, however, that Cramer said are worth holding onto, even on the up days. One such stock is that of
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS. Cramer said Apple is a special circumstance, where we know shares are headed dramatically higher.
Cramer said with all of the buzz surrounding Apple's marketcap exceeding that of arch rival
, investors shouldn't be scared away by that valuation, or by Apple's $250 share price. He said Apple's valuation isn't wrong, nor silly, it makes perfect sense.
Cramer called Apple the greatest manufacturer on Earth, a company that's selling into huge end markets for PCs, phones, mobile devices and of course, music. He said Apple is still just beginning to penetrate the cell phone market. The company's market share is still in the single digits, in fact. And with the iPad, Apple created a whole new category of devices, and can't seem to keep them on store shelves.
Cramer said Microsoft, however, has saturated its primary market for PC operating systems, and therefore doesn't command a growth multiple. But Apple, with its $50 a share in cash, could earn as much as $17 to $20 a share in 2011, which Cramer said gives the stock only a 12.5 multiple. He reiterated his $300 price target on the stock, which would still only give Apple a price-to-earnings multiple of 15.
In the "Executive Decision" segment, Cramer sat down with Ray Milchovich, the outgoing chairman and president of
, an energy engineering and construction giant whose shares have fallen 24% from their recent highs on fears that oil and gas projects might be scaled back on environmental concerns.
Milchovich said that Foster Wheeler is a pure play on energy infrastructure, and with the recent bearish views on energy, his company's stock has taken a hit. But, he noted, the company believes that by the second half of 2010, another build cycle will have begun, and Foster Wheeler will be positioned to capitalize on it.
Milchovich also noted that in the Asia Pacific region, liquified natural gas is proving to be a crucial new fuel for the region and he expects further investment in natural gas. While here in the U.S., Milchovich said that recent discoveries and technology have proven that natural gas could be a big player, if Washington gets on board. He said that an energy plan without fossil fuels can't exist in the U.S., and that natural gas is the logical choice to meet our energy needs.
Finally, when asked about what makes him most proud at Foster Wheeler, Milchovich said he's delighted to see a company that once teetered on bankruptcy now in a position to compete with anyone around the globe, and do so with high margins thanks to its disciplined approach to its business.
Cramer wished Milchovich well and said that now's the time to dive back into Foster Wheeler stock.
In the Thursday "Sell Block" segment, Cramer released
from solitary confinement. He said it's now OK to pull the trigger, and buy some Annaly.
Cramer sentenced Annaly to the sell block on March 7, 2008 amidst fears that the company wouldn't be able to secure the short-term funding it needed to continue its operations. Back then, Annaly traded at $15 a share, down from a high of $20 a share. The stock continued to slide to just $11 a share in the height of the financial panic, before starting to recover.
But Cramer explained that Annaly, a mortgage real estate investment trust, or REIT, is now well positioned to profit, as it borrows money at very low interest rates to invest in higher-yielding mortgage bonds. Annaly currently returns 90% of its profits to shareholders, which affords the stock a 15.5% dividend yield.
While some still fear that refinancing risks and mortgage defaults could derail Annaly, Cramer said most of these fears are already baked into the company's share price. The stock currently trades at less than the company's $18 a share book value, despite having returned 469% to sharesholders over the last 10 years and 42% over the last five years.
Cramer said investors who stick with Annaly could see their money double in just four and a half years, assuming they reinvest their dividends.
Buy the UIL Secondary
There is one company benefitting from the European contagion, and that's the Connecticut utility
, said Cramer.
Cramer explained that UIL is buying natural gas customers from a Spanish utility that presumably is in desperate need for cash. The deal, worth $1.3 billion, nearly doubles UIL's customer base to almost 700,000 customers and diversifies it away from being solely an electric utility to an electric and natural gas utility.
Cramer said there aren't too many utilities out there with truly organic growth, and UIL is now one of them. The deal provides the company with enhanced cash flow per share almost immediately, and is additive to earnings beginning in 2012, and that's before any cost savings have been applied.
Dividend Stock Ideas 10 High-Yielders Under $5
UIL sports a 7.1% dividend yield, but even with that yield, Cramer advised viewers not to buy UIL in the open market. He instead advised investors to call their broker and ask to get in on the secondary offering of shares that will be coming soon to finance the acquisition. "That's the deal you want to be in on," said Cramer.
In the Lightning Round, Cramer was bullish on
Capital One Financial
Bank of America
Cramer was bearish on
Maxim Integrated Products
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was long Apple, Bank of America and JPMorgan.
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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