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NEW YORK (
) -- "Don't sell the best assets out there just because some of the worst assets are heading lower," Jim Cramer told the viewers of his
TV show Thursday as he urged investors to not sell their stocks on fears of a U.S. debt downgrade.
Cramer said such a downgrade won't be Armageddon for stocks, and the missed opportunities might be a whole lot more painful.
According to Cramer, a U.S. debt downgrade will cause investors to sell U.S. bonds and thereby raise interest rates, and it will likely send the U.S. dollar lower. He said it will also wreak havoc on the bank stocks, which are already the worst performing sector. But beyond that, he said, stocks will largely be unaffected.
He said it "doesn't make sense to sell stocks of companies that have great balance sheets just because our government has a terrible one."
Cramer said selling stocks like
would have cost investors 50 points today as the Internet search giant reported stellar earnings.
Selling stocks like
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS, also makes no sense. Sanofi yields 4.5%, far better than any dividend, and its earnings are not affected by the U.S. debt crisis, said Cramer.
Cramer also noted that
announcement that it's breaking itself into two in order to unlock value is another opportunity investors would have missed had they sold their stocks. Even without the breakup, he said, Conoco still yields 3.6%, also better than treasuries.
Cramer said the markets might be choppy until a debt ceiling deal is reached, but the opportunities are just to great to miss.
Conoco's Golden Opportunity
"Sometimes breaking up is good for business," Cramer told viewers as he dove deeper into Conoco Phillips' announcement that it's spinning off its refining operations and holding onto its lucrative oil and gas exploration and production operations. After popping up $7 a share, Conoco gave back most of its gains as the market tanked, but Cramer said that created a golden opportunity.
Cramer said shares of Conoco should have gone up much more today. He said the company trades at just nine times earnings, yet its parts are worth upwards of $100 a share, 25% more than they're worth today. Conoco, as it stands now, he said, is just too big and complicated to bring out its true value.
Cramer gave himself a pat on the back, as he recommended that Conoco make just such a move back in January. Since then, share are up a modest 10%, but Cramer said Conoco will likely follow the path of
, which saw a 21% pop off the news of the breakup and a 42% gain over the next few months.
As for others in the industry that might follow the same path as Conoco and Marathon, Cramer said the pickings are slim. He said
, another Action Alerts PLUS name, is too well run and isn't worth more on a breakup. He said the same applies to
, where the parts are only worth about $130 a share, just slightly higher than were they trade now.
Cramer told investors they need to use today's weakness as an entry point for Conoco and get in while the getting is good.
Playing Dunkin' Donuts IPO
In the "Know Your IPO" segment, Cramer featured the upcoming IPO of Dunkin' Donuts, which will soon be trading under the ticker DNKN. Cramer said that Dunkin' is the most attractive of the coffee stocks and investors don't want to miss this compelling IPO.
Cramer said the Dunkin' story is all about the power of its brand. The company operated over 9800 Dunkin' Donuts locations along with an additional 6400 Baskin-Robbins ice cream shops. The company is 100% franchised, which means it doesn't need to raise capital to open more stores and 90% of the company's new stores are opened by existing franchisees.
Dunkin' also has some of the most loyal customers on the planet, said Cramer, noting that nearly 60% of Dunkin' sales now stem from coffee. Dunkin has clearly won the breakfast wars, he said.
As for the IPO itself, Dunkin'plans on offering 22.3 million shares between $16 and $18 a share. Cramer said that pricing values the company at 20 times earnings. Rival
trades at 22 times earnings, but unlike Starbucks, Dunkin' has been able to double its same store sales over the past two quarters. Cramer said he also likes the fact that none of the company's three private equity firms are selling out on the IPO.
Cramer said Dunkin' is a buy on the IPO, but he would not be a buyer in the open market. He said shares are worth up to $20 a share, after which he'd be a seller. If the IPO prices above $20, he said he'd take a pass.
Cramer told a viewer that he hates technology stocks at the moment, which is why he cannot recommend
, as all of the semiconductor stocks trade in tandem.
Cramer told another viewer that
is still inexpensive and he'd be a buyer of the stock into the mid-20s. He has also bullish on
BP Prudhoe Bay
a stock which he said was perfect for an IRA or 401K and one that should do well now that oil prices are stabilizing.
Finally, Cramer gave the nod to
, a stock he said should be bought on any weakness.
Cramer was bullish on
SPDR Gold Shares
Public Service Enterprise
He was bearish on
North American Palladium
In his "No Huddle Offense" segment, Cramer said that now is not the time to buy into the bank stocks. He said the solid quarter from
will be the exception, not the rule, as JPMorgan is the envy of the industry.
The bar is simply set too high for the other banks, and most other banks are well behind Morgan on their litigation risk and loan losses, he said. The banks are still hated by Wall Street and Washington alike, said Cramer, who advised investors to have as little exposure to the bank stocks as possible.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Sanofi-Aventis, Hess.
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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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.