Cramer's 'Mad Money' Recap: Media's Misdirection Plays (Final)
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NEW YORK (
) -- "Don't be fooled by selective negativity," Jim Cramer told the viewers of his
TV show Wednesday, after saying that the media is focused on all the wrong issues.
Cramer said the markets shrugged off this false negativity and ended the day higher because it focused on what was important.
Cramer said there were two bits of greatly positive news today, a slight drop in unemployment claims and the announcement that
BJ's Wholesale Club
(BJ) - Get Report
received a takeover bid. But the media chose to focus its efforts on the G20 summit and shortfalls in the apparel sector.
"Don't be fooled by the media's deception," said Cramer. He said that job creation has finally begun now that the elections are behind us, and the unemployment numbers prove it.
He also said that everything in our economy, from consumer spending to home prices, revolves around jobs, which is why any drop in unemployment claims is a big deal.
Cramer also said that the BJ's deal was also significant, as it's the second deal after
Gymboree
( GYMB) announced it was going private last week. "If things are so bad, why are smart guys buying up these companies?"
Cramer called the media's attention to all of the wrong things "selective negativity," and urged investors not to be sucked in by the headlines. Jobs matter, he said, as do takeovers like that of
Chevron
(CVX) - Get Report
of
Atlas Energy
(ATLS)
, another recently announced deal that made shareholders a lot of money.
Bouncing Back
In the "Executive Decision" segment, Cramer spoke with Jay Shah, CEO of
Hersha Hospitality
(HT) - Get Report
, a real estate investment trust that operates 76 hotels in the Northeast. Hersha hit hard times during the recession and watched its stock fall 91% between 2007 an 2009. But now, Cramer said the company's balance sheet is fixed and Hersha is ready to grow again.
Shah explained that Hersha has successfully made it through two of the worst years for hospitality the industry has ever seen. He said that the company was able to raise $450 million in equity and increase its line of credit to $250 million. Shah said that having access to the equity and debt markets has been critical for the company and Hersha now has flexibility and even access to growth capital for acquisitions.
Shah went on further to detail that Hersha, which operates mainly in Boston, New York, Washington D.C. and Philadelphia, is finally seeing upticks in its year-over- year top line revenues. New York, he said, was up 14.5%, while Boston saw growth of 13.5%.
When asked about the company's dividend, Shah said that Hersha's dividend has been a mainstay for the company and that he's optimistic that it can be rebuilt at revenues continue to climb.
Cramer was bullish on Hersha, saying that there are very few hotel REITs and Hersha is one whose time has finally come. Cramer gave Hersha a "strong buy."
Bullish Outlook
What's the sign that things at a company are about to get a lot better? Cramer said it occurs when the company reports bad news, and the stock doesn't go down.
Such is the case with
MEMC Electronics
(WFR)
, which manufactures silicon wafers for semiconductors and solar panels. Back on Oct. 6, Cramer told viewers that he expected the company to report bad third-quarter results, but after that, the stock would be a buy.
As expected, MEMC did report a disappointing quarter, sending the stock down 6% initially. But Cramer noted that since then shares of MEMC have slowly been moving higher, a sign that the bad news is over.
Cramer said the disappointing outlook that was widely reported by the media was caused by an accounting issue, and one the company pre-announced would be coming. In reality, MEMC's outlook for 2011 is surprisingly bullish.
MEMC predicts strong demand and higher prices for its semiconductor wafer business, and is raising capacity with a new factory. Sales of the company's solar products were up 31% sequentially, another bright spot for the company. Finally, MEMC's SunEdison division, which installs solar equipment, currently has 1,000 megawatts of projects in its pipeline.
Cramer said MEMC is a comeback story, despite the stock remaining at just 12.9 times earnings. He said most analysts are digging in their heels, with only one of the 26 analysts covering MEMC having upgraded the stock since the rosy outlook was announced.
Cramer said MEMC has an 18% long-term growth rate and could earn $1.50 a share in 2011, 50 cents a share more than the analysts expect. Even using current depressed multiples, Cramer said MEMC's stock could see $19 a share.
Am I Diversified?
Cramer spoke with callers to see if their portfolios have what it takes. The first caller's portfolio included
BB&T Bank
(BBT) - Get Report
,
Altria
(MO) - Get Report
,
Phillip Morris International
(PM) - Get Report
,
Invesco
(IVR) - Get Report
and
Verizon
(VZ) - Get Report
.
Cramer didn't like owning two tobacco stocks and recommended adding a real estate investment trust to replace one of them.
The second caller's top holdings included
SPDR Gold Shares
(GLD) - Get Report
,
MarkWest Energy
(MWE)
,
Healthcare REIT
(HCN)
,
Boeing
(BA) - Get Report
and
Marathon Oil
(MRO) - Get Report
.
Cramer said this portfolio was perfectly diversified because Marathon and MarkWest are different oil plays.
Lightning Round
Cramer was bullish on
OmniVision Technologies
(OVTI)
,
Abbott Laboratories
(ABT) - Get Report
,
KKR Financial Holdings
(KFN)
and
Motorola
( MOT).
He was bearish on
Pfizer
(PFE) - Get Report
and
Green Mountain Coffee Roasters
(GMCR)
.
Closing Comments
"It's been a long time, but the bank stocks are working," Cramer said, adding the banks are beginning to rally now that at least a few jobs are being created. "Jobs cure foreclosures," he reminded viewers, adding mortgage applications are also seeing an uptick.
Cramer said the banks are making money again, and the
Federal Reserve
is working hard to correct the credit spiral. The time of bullish bank stocks may be upon us.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was not long any stock mentioned.
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