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"Today's market action was so bullish; it's time to sell," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.
After rallying hard from last month's lows, the market is so over-bought that it's time to ring the register and take some profits, he said. Everyone seems to be jumping on the bull bandwagon, and that simply won't last, he added.
According to Cramer, much of the recent enthusiasm for the markets stems from the fact that central bankers around the globe finally "get it" and are stepping up to save their economies.
He said the federal government seems to be buying up everything in sight, even things that are totally undeserving.
Although the possibility of another Great Depression is off the table, the possibility of a severe recession still exists, and it won't be long before investors return to a fearful stance, he said.
Cramer advised taking profits and trimming positions in the areas he's been touting such as high-yielding dividend stocks, recession resistant names, and companies that were trading at or near their cash values.
He said investors will need cash to take advantage of the next round of selling.
"It's time to take profits before they disappear," said Cramer. "Be ready to buy, buy, buy when the next sell-off hits."
Cramer: Follow These Dow Stocks
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Stick With Staples
"On Wall Street, good things don't come in small packages," Cramer told viewers.
That's why when it comes to office supplies, he's choosing
over its smaller rivals
Both OfficeMax and Office Depot have had incredible runs as of late, posting a 92% and 98% gain in recent sessions. But Cramer said the small share prices of both companies give them the illusion of value while Staples is 10 times the company of either of them.
Cramer said Office Depot and OfficeMax are not cheap. Office Depot trades at just 10 times its earnings with an $890 million marketcap, but carries $900 million in debt.
Similarly, OfficeMax trades at just 5 times earnings with a $500 million marketcap, with $1.8 billion in debt.
"You want best of breed," said Cramer. Staples may have only had half the run of its rivals, with only a 43% gain in recent weeks, but it's more than twice the company, he said. He called the company the only investable option, with the greatest ability to expand.
In the office supply business, size does matter, and Staples has been able to take advantage of its struggling competitors. On just about every metric, Cramer said, Staples has outperformed the competition.
Cramer said Staples is worth every bit of the premium its share price receives.
An Alluring Dividend
"The conventional wisdom is wrong, Caterpillar is a buy," said Cramer. He said that despite lower earnings estimates and a stock price that's been cut in half, the time is right to buy
Cramer called Caterpillar another "accidental high-yielder," a stock whose share price has gotten so low that it begs to be bought on its dividend alone. With a 4% dividend yield, Cramer said he's a buyer of Cat, and if the yield rises to 4.5% or 5%, he'd buy even more.
Cramer said there's simply a disconnect between the Wall Street analysts and Caterpillar's management. While the analysts are slashing estimates and expressing concerns about a rising dollar and the company's exposure to the energy and housing sectors, Cat's management expects 2009 revenues to be flat and sees the housing market stabilizing.
"The analysts are behind the curve," said Cramer. The stock has already been cut in half and already reflects all of the bad news, he said. The dividend yield, however, pays investors to wait while the analysts are proved wrong.
Cramer also called the Illinois-based Caterpillar an excellent play on an Obama presidency.
Outrage of the Day
In this segment, Cramer took aim at the U.S. Treasury Department, who earlier today leaked that
may be next on the short list of firms to receive federal bailout money.
Cramer said CIT was grossly undeserving of the government's assistance, adding Treasury's announcement of its intentions the ultimate in socialist capitalism.
Cramer was bullish on
Cramer was bearish on
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At the time of publication, Cramer was long JPMorgan, Bristol-Myers Squibb, Morgan Stanley.
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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