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NEW YORK (
) -- "Don't over think the markets," Jim Cramer told the viewers of his
TV show Friday as he laid out his game plan for next week's trading.
He said that the big traders only care about one thing, the dollar, and that means if the dollar gets weaker, the big money will be buying
futures, but if not, they'll be selling like gangbusters.
With that in mind, Cramer said he'll still be watching a handful of stocks that report earnings next week. On Monday, he'll be watching
, a supermarket for all things tech. Cramer said he never trades this company, but its forecasts for the various tech sectors are golden.
will have Cramer's ear. He said AutoZone rarely misses, and is a great call option play. Medtronic is red hot, he said, and should also do will this quarter.
On Wednesday, Cramer said to skip
American Eagle Outfitters
, as teen apparel is too hard to gauge, but
is a winner.
will likely be a bust with continued weak housing, but Cramer advised selling both
ahead of their quarters, only to pick them back up on the cheap after they report.
For Thursday, Cramer liked
, both of which should report good things.
On the IPO front, Cramer said he would not be a buyer of Yandex, but the IPO of Freescale, coming under the symbol "FSL" does look attractive.
Under the Radar
For "Speculation Friday," Cramer highlighted a great new IPO. No, not
, but rather the little-known French semiconductor company called
Sequans went public a month ago, and unlike LinkedIn, had a miserable IPO that failed to generate any interest for the company. Shares were priced at the low end of the range, $9, and opened down at just $7.95. So why jump in now? Cramer said the quiet period for Sequans ends next week, meaning that analysts will begin covering the company with buy ratings, pumping up the share price.
Sequans manufactures chips based on the wireless 4G standard that is just beginning to roll out worldwide. While only 0.33% of all handsets support 4G today, that number will jump to 20% by 2014. The company just shipped its 10 millionth chipset, has $9.7 million in cash on its balance sheet and has no debt to speak of. Cramer said the stock is cheap, trading at a low 4.5 times forward sales.
Cramer said Sequans may be a speculative little stock, and one that has yet to supply chips to any of the major wireless carriers, but given the explosion in 4G technology, the company is in the right place at the right time to begin reaping the 4G rewards.
Cheap by Comparison
"LinkedIn may be absurdly overvalued," Cramer told viewers, "but it makes a whole host of other stocks cheap by comparison." Cramer then compared the newly minted shares of LinkedIn versus that of favorites
Cramer said it's hard to value LinkedIn since the company just became profitable last year, so we have to look at revenues, of which LinkedIn has $243 million. That means LinkedIn trades at the sky-high level of 37 times trailing sales. Cramer said assuming the company doubles those revenues next year, as the markets suggest, then LinkedIn is valued at 20 times forward sales.
By comparison, Salesforce.com trades at just 10 times forward sales, despite the fact shares are up 500% since Cramer recommended it in November, 2008. Cramer said not only is Salesforce a better company than LinkedIn, is still has plenty of room to grow since it's only penetrated 2% of the market.
Then there's Netflix, which trades at a paltry four times sales. Netflix may have only 23.6 million subscribers, compared to LinkedIn's 100 million, but Cramer noted that every one of Netflix subscribers pays money every month, a far cry from LinkedIn. Netflix is growing like a weed; yet of the 28 analysts covering the stock, only 12 rate it a buy. This despite shares rising 350% since Cramer flagged it in October 2007.
Cramer said he hates the valuation LinkedIn received its first day, but it does do great things for its peers, especially the ones with accelerating growth in the hottest of markets.
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
Phillip Morris International
Cramer advised selling Phillip Morris and picking up an industrial stock to be properly diversified.
The second caller's top holdings included
Cramer said this portfolio was perfection with diversification and yield.
The third caller had
Discover Financial Services
Kinder Morgan Energy Partners
as their top five stocks.
Cramer said this portfolio was well-played.
Cramer was bullish on
Kinder Morgan Energy Partners
He was bearish on
Kinder Morgan Management
What Moves Today's Markets
In his "No Huddle Offense" segment, Cramer said he misses the old days, when he would get up at 7 a.m., check the only business wire for news, then stroll into the office to follow his stocks. Back then, it was all about company-by-company news and the economy, he said, and occasionally about Washington.
But today it's a different story, said Cramer. Today he's up at 4 a.m., three hours earlier. The first thing he checks is the
CurrencyShares Euro Trust
for a read on the U.S. dollar. If the FXE is down, then so too will be stocks, if not, then it might be a good day. But that is followed by checking Greek bond spreads, refinancing in Portugal and the stability of the Irish recovery. Then it's off to check copper prices, because that's a gauge on the Chinese recovery.
And then, after all of that, Cramer said he looks for U.S. news. He said as ridiculous as all that seems, that's what's driving the markets, he said. "So much for America," he concluded.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was not long any stock mentioned.
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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