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NEW YORK (
) -- "There are a lot of reasons why this market may not be done going down but those reasons aren't the ones you think," Jim Cramer told viewers of his
TV show Wednesday.
Cramer said it's not the new and existing home sales that we need to worry about, nor is it a slowdown in manufacturing. The truth is, he said, that housing and manufacturing just aren't big parts of our economy any more. What is important, however, is the litany of smaller worries that continue to plague investors.
Cramer once again blamed President Obama's undeclared war on stocks for many of these worries. "Confidence is what leadership is all about," he said, and confidence is what the market is sorely lacking. Cramer cited the following worries.
No. 1. Capital gains taxes. Cramer said no one knows what their tax rate on investments will be next year. Given that uncertainty, it's no wonder investors are locking in profits now.
No. 2. The costs of the new health care reforms. Cramer said no one knows the true cost of health care anymore, and that scares businesses into not hiring.
3. Financial reforms. Cramer said no one knows what the 2,000 page financial reforms will mean for the banks.
4. Housing prices. Cramer said no one knows what their home is worth, especially given the constant expiring and renewing and amending of government programs.
5. Obama's pro-labor agenda. Cramer said no one knows if Obama's card check union plan will resurface, or his cap-and-trade initiatives, or new taxes on overseas earnings.
Cramer said given how much we don't know about the president's plans, the stock market can't rally and could in fact drift down to Dow 9,300. Investors shouldn't be recklessly buying, said Cramer.
Instead, he said that should be buying high quality dividend stocks on the dips, stocks like
Investors looking for new investing ideas need to consult the 52-week high list, Cramer told viewers. That's where he found the little known stock of
, a company with a conglomerate of filtration and separation businesses.
Cramer said this sleeper stock is firing on all cylinders. The company delivered a nine-cent-a-share earnings beat when it last reported on a 27% boost in revenues. Polypore's stellar results mark the fourth straight quarter the company has beaten Wall Street's expectations.
So what does Polypore do? It makes materials for everything from lead acid and lithium ion batteries, as well as water filters and filters used in everything from power plants to blood dialysis. Cramer said the beauty of all these industries is that they're oligopolies, with high barriers to entry.
Polypore saw revenues of its lead acid battery business up 22% for the quarter, with 60% of that revenue coming from recurring sales. Cramer said Polypore is also the No. 3 player in lithium ion battery components, a business with revenues up 57%.
Cramer said he'd use the current market weakness to snatch up some Polypore before it continues its rocket run higher.
"Mergers and acquisitions are back in a big way," Cramer told viewers. From the mega deals of
( MFE), to the host of smaller deals like
( NAL), merger mania is back.
Cramer said while we may not know which companies are going to be getting taken over, we do know which company they'll be consulting with to do the deal, and that company is
, an advisory firm that specializes in mergers and acquisitions.
Cramer said Lazard is the best way to play merger mania because mergers represent 29% of Lazard's revenue, far more than any other investment bank out there. The company's backlog rose to $280 million earlier this year, up 64% from December, and continues to rise.
Cramer said mergers clearly have a long way to go, as they need to jump 79% just to hit 2009 levels. This leaves a lot of upside for Lazard, whose shares are down 12% on the year. Cramer said while the analysts give Lazard a $36 price target, he feels the estimates are far too low, and the company could earn $2.45 a share. Given a multiple a 20, Cramer said his target is $49 a share.
Am I Diversified?
Cramer spoke with callers to see if their portfolios have what it takes. The first caller's portfolio included:
Kinder Morgan Energy Partners
Cramer said while Altria and Phillip Morris were once one company, you can't hold onto both, and he'd sell one for a telco like
The second caller's top holdings included
Cramer said this portfolio was beautifully diversified.
Cramer was bullish on
( JCG) and
He was bearish on
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Apple.
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