
Cramer's 'Mad Money' Recap: In Dividends We Trust (Final)
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NEW YORK (
) -- In this era of mass distrust for Wall Street, Jim Cramer told the viewers of his "Mad Money" TV show Tuesday that there is one aspect of Wall Street worth defending: dividends.
Cramer recounted a talk he gave to a class of seventh graders Monday, where he was barraged with questions like "Isn't the market rigged?" and "Isn't the market just for rich people?" Cramer said he struggled for an impromptu response to these insightful questions, but after having time to reflect, has refined his answer.
Cramer acknowledged there is some unfairness on Wall Street, and that some traders have an inside edge on others. But, he insisted investors can make money in stocks, and they can protect themselves from deceit through diversification and dividends.
Cramer said dividends are the real key to investing. He said that from Jan 1, 2000 through today, the stocks in the
Dow Jones Industrial Average
are down 5.6%, but if those stocks' dividends are added, you'd be up 19%.
Cramer said that there are some really great companies, like
Eaton
(ETN) - Get Report
, which yielded 5.1% at its low. Others, like
Chevron
(CVX) - Get Report
yielded 4.7% at its low, only to rally 82 points since that low. The industrial giant
Emerson
(EMR) - Get Report
has rallied 109% off its low, thanks in part to the company's high dividend yield.
Cramer said dividends aren't talked about a lot, not nearly as much as the headlines and scandals, but they're definitely important, and are certainly worth mention to a class of seventh graders.
More on Dividends |
A Global Player
In the "Executive Decision" segment, Cramer sat down with Gary Smith, president and CEO of telco equipment maker
Ciena
(CIEN) - Get Report
, a stock that has tripled since Cramer first recommended it on Dec. 12, 2008.
Smith explained that while Ciena used to be a specialist player in helping to move Internet traffic, the company, through its recent acquisitions, now has the scale to become a global presence in Internet network equipment business. He said that 75% of the world's largest carriers are now Ciena customers.
When asked whether Cramer's
thesis is for real, Smith said we're just seeing the early days of devices that can handle voice, video and data, adding such devices will create massive demands for more capacity.
When asked how Ciena competes with the big boys,
Cisco
(CSCO) - Get Report
, a stock which Cramer owns for his charitable trust,
, and
Juniper Networks
(JNPR) - Get Report
, Smith said that Ciena's equipment is complementary to the offerings of
Cisco
and Juniper, and that there is a lot of demand for equipment from all three players.
Finally, when asked how this Internet boom compared to the dot com bust of 2001, Smith said that this time there are real business models in place, and people are actually paying for more capacity, something that didn't happen in 2001.
You can read about
Cramer's Mobile Internet Tsumani Stocks
from Jim's best-selling book,
Getting Back To Even
.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Tim Collins over the chart of
Pier 1 Imports
(PIR) - Get Report
, a specialty retailer whose turnaround is working, and whose stock is up 507% over the last year.
Collins said he likes the stock, but would not be a buyer at current levels. He said the stocks' daily chart shows it's testing its recent breakout, and is likely to fall to around $7.50 a share, where Collins said he would be a buyer. This trend was confirmed by the stock's weekly chart, where it's broken out six times after pulling back to its 14 week moving average.
According to Cramer however, Pier 1 is headed higher, so "what's the point in waiting?" He said the company has closed over 100 underperforming stores, renegotiated rent on about a third of its remaining stores, and shifted away from higher ticket, slower selling items and more toward lower ticket items that move much quicker.
Pier 1 posted a stellar quarter, with same store sales up 6.5% on a higher average ticket. The company is also shoring up its balance sheet, with $109 million in cash on the books. "All this from a company that we thought could see bankruptcy," said Cramer.
Cramer said he would pull the trigger between $8 and $8.25 a share, as shares of Pier 1 are headed easily to $10 a share.
Mad Mail
Cramer told a viewer that
Bucyrus
( BUCY) is still heading higher and he'd be a buyer if the stock pulls back.
Cramer told another viewer that
Chemical and Mining of Chile
(SQM) - Get Report
remains his favorite way to play lithium batteries, despite the hard times that have befallen Chile.
Lightning Round
Cramer was bullish on
SanDisk
(SNDK)
,
DuPont
(DD) - Get Report
,
RF Micro Devices
(RFMD)
,
Xilinx
(XLNX) - Get Report
,
Cypress Semiconductor
(CY) - Get Report
,
Triquint Semiconductor
(TQNT)
,
Skyworks Solutions
(SWKS) - Get Report
,
Standard Pacific
(SPF)
,
Discovery Holdings
(DISCA) - Get Report
and
Apple
(AAPL) - Get Report
.
He was bearish on
Mosaic
(MOS) - Get Report
,
Polo Ralph Lauren
(RL) - Get Report
and
Palm
( PALM).
Closing Comments
Cramer said that it's hard to fathom how well
Apple
(AAPL) - Get Report
, a stock which he owns for his charitable trust,
Action Alerts PLUS, is doing. He said the company is clearly firing on all cylinders, and despite the stock's 52-week high, investors haven't missed the move.
-- Written by Scott Rutt in Washington D.C.
To watch replays of Cramer's video segments, visit the Mad Moneypage on CNBC
.
Want more Cramer? Check out Jim's rules and commandments forinvesting from his latest book by
clicking here.
For more of Cramer's insights during the Lightning Round, clickhere
.
At the time of publication, Cramer was long Cisco, Apple.
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