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A cautious Jim Cramer told viewers of his "Mad Money" TV Show Monday that despite the market's 413-point rally today, he's still taking things one day a time.
Cramer was cheered by a bit of positive news that the market is near a bottom in
bid to purchase
, at a 37% premium from Friday's close. He encouraged NRG's CEO, David Crane, to accept the gracious offer.
In typical Cramer fashion, he drove his point home by adding three new CEO's to his "Wall of Shame" list of the worst executives. They included Straus Zelnick, of
, Oleg Khaykin, of
, andJohn Lauer, of
, all of who rejected gracious takeover bids only to watch their stock price plummet afterward.
International Rectifier received a takeover bid on Aug. 15 for$22.15 a share and rejected it, despite closing the previous day at $18.82 a share. The stock currently trades at just over $14.
Take Two received a bid from rival
( ERTS) on Feb. 26 at a 64% premium to its share price. That offer too was rejected. Take Two now trades at roughly half that value.
Finally, Diebold rejected a takeover bid it received on March 2 from
for a $40 a share, a 65% premium to its share price. That stock now trades at $28 a share.
Cramer said the Excelon-NRG bid tells us two things. First, companies are starting to see value in their rivals, and second, "when you get a bid, you say 'yes!'"
Cramer: Exelon-NRG Deal Should Happen
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The Curse of Lehman
Cramer said he's been hard on the case to find out why shares of
have been hit especially hard since his Oct. 2 recommendation of the company. He talked with Linn chairman and CEO Michael Linn to get to the bottom of the situation.
Cramer cited Linn Energy as an example of collateral damage from the forced liquidation of Lehman Brothers, probably one of the biggest blunders in the financial crisis.
Linn confirmed that the failed Lehman Brothers was the company's largest shareholder, and that when the brokerage collapsed, large blocks of Linn stock were liquidated at record speeds.
While the failure took its toll on the share price, Linn said, it did not affect the company's operations, and all of its hedged production was re-hedged with other banks.
Linn said that Lehman still owes the company $68 million, but does not see that amount affecting operations, or the company's 17% dividend yield.
Cramer said the case of Linn is a perfect example of a broken stock and not a broken company. He said he likes the company as a capital preservation stock, with its $100 million buyback and its high-yielding dividend.
Cheap Oil Play
With oil plummeting from $147 to just $75 a barrel, Cramer continued his hunt for stocks that benefit from falling crude prices.
He said obvious choices such as
just don't work, since any savings from low cost resin is offset by lower sales in a weak economy. But there is one stock that Cramer said he'd be a buyer of.
That's medical supply company
, which not only benefits from lower oil prices, but also shines bright in a weakening economy. He called the company a sister stock of his other favorite oil play
Becton Dickinson is a solid performer, growing at 12% to 15% a year. Sixty-five percent of the company's sales comes from markets where it is the No. 1 or No. 2 player. Additionally, 35% to 40% of Becton's sales are derived from needles, syringes and infection-control products, all highly recession-proof items.
Cramer said Becton has been hurt by a large hedge fund short position, which has been betting on the price of resin, which represents 7% of its raw costs, to remain high. But with only three to five months of resin inventory in stock, Cramer said lower resin prices should start hitting the company's bottom line in early 2009.
Becton currently trades at just 14.4 times next year's earnings, a lower multiple than its historical level of 16 to 24 times. With a 13% long term growth rate, Cramer said BDX is cheap, and could fetch as much at $89 a share, or a 23% premium.
In this segment, Cramer told a viewer that he cannot recommend
based on a new bill that Congress recently passed. Cramer said he foresees too many rocky quarters for the company before the bill takes effect.
Cramer told another viewer he still likes
, a stock which he owns for his charitable trust,
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At the time of publication, Cramer was long Quanta Services.
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