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Now that the high tides are coming back in, "it's time let go of the consumer staples and latch onto something else," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. He recommends financials, cyclicals and technology as the way to go.
"It is time to get rid of the cereal and soda stocks," Cramer said, acknowledging that he needed to change his entire stance on the market and completely reposition. The six-month time period of outperformance was just about up for consumer staples now that the idea of a miserable economy died last week, he said.
Cramer recommended ringing the register now that "the soft-landing crowd got the evidence they wanted. Retail sales, excluding
, were dynamite. Also, there was the possibility that housing hit a bottom and was on the way back up. Both of these lead to the benign market we've seen recently."
While he recommended leaving
on the table, Cramer pointed to
Black & Decker
as stocks to pick up.
Among tech names, Cramer recommended heavyweights, such as
, adding that they "should all treat you well."
Cramer also decided that "breaking all discipline" would be necessary and recommended airline stocks, including his trade of the week
, as well as
Homebuilders were also worth looking at after Cramer again reiterated that "it's time to unload your defensive stocks," adding that "once they report, you have to exit." Cramer said
was his pick out of all the homebuilding stocks.
Cramer put heavy emphasis on the fact that oil prices had come down recently, adding that it is "not an indicator on the health of the economy." In response to a caller, Cramer said that oil-related stocks should not be considered cyclical. "This is something to be looked into because it's not cyclical at all."
Cramer told viewers that there are three ways to spot a company that has turned around before the stock has. "If management has gotten its act together, and second, if the company has managed to stop screwing up whatever they were flubbing before, then you got something cooking," Cramer said.
The third and final component is something Cramer called the power of hate. "If you really want to make money, you have to find a stock that is absolutely despised," he added.
is a hunting and fishing retailer "at a pivotal phase in its turnaround, and the stock is so hated," adding that the stock was a lemon straight out of the gate because the company was poorly run.
In addition to the massive same-store sales shortfall, both JPMorgan Chase and First Boston, who underwrote the IPO, never endorsed the stock. Cramer added that the analysts "are completely smug in the dismissal of the stock, and they're about to get their comeuppance."
Cabela's suffered from the price of gas, but with lower prices, comparable-stores sales should be up and costs should come down due to a new inventory system, Cramer said. "Management has also finally figured out what Wall Street likes, and that's growth." In addition to the 17 stores Cabela's operates, there are eight more slated to open in 2007.
Cramer also said that the shorts are all betting on another shortfall, and it's headed for a short squeeze. "Considering how cheap the stock is, what's not to like?" Cramer asked.
"I wouldn't buy it without anything but a tight limit order," Cramer warned, instead of picking up shares at the after-hours price.
In response to another caller, Cramer said he wasn't favorable toward
, recommending instead to stick with
Smith & Wesson
. "Take half off the table because you are being hogs," he said, adding that "you aren't getting me to endorse Taser."
A third caller asked about the near 52-week high on
and when would be the time to dump shares. "I think you're playing with fire," Cramer said. "The best time to sell it would be now and then before the next summer."
Cramer pointed out that
was sent up 7 points quickly after it was beaten up. "When you see it bounce like it did in a week, what drove it down to make it rally that much" is what matters, he said.
A negative article in
The Wall Street Journal
about a steel glut is something the market already knows, Cramer said. "The press only reports a story long after the market already knows about it."
There are really hard fought moments when it's too late to sell that give everyone a sinking feeling, signaling a buy, he said. "That's not when you panic. That's when you should be pulling the trigger. That's when you should be buying."
Do more rigorous homework, Cramer recommended, adding that you shouldn't make a move by reading press headlines.
Cramer welcomed Kendall Gammon and Eddie Kennison, players for the Kansas City Chiefs NFL franchise, onto the show. Cramer said they have great things to add to "Mad Money" and are "bringing their drive to win in football to investing in stocks."
Gammon, who completed the NFL Business and Entrepreneurial Program at Harvard University, said that "you can learn to ask the right questions." Gammon looks at everything on a five-year time horizon.
His holdings include
Gammon added that he certainly doesn't have the time to do the necessary homework, so he listens closely to those people that can do the homework for him.
Kennison, who also completed the NFL Business and Entrepreneurial Program, said his strategy involved funds such as the
Morgan Stanley Institutional U.S. Real Estate fund
William Blair & Co. International Growth fund
The Growth Fund of America
Kennison also added that the NFL Players Association 401K plan was one of the world's best, matching contributions 2:1.
Cramer was bullish on
Allscripts Healthcare Solutions
Cramer was bearish on
Sirius Satellite Radio
Cramer said he couldn't give an opinion on
and he would have to have his research team look into it.
For more of Cramer's insights during the most recent Lightning Round,
Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by
At the time of publication, Cramer was long Altria, Hewlett-Packard and Ingersoll Rand.
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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