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NEW YORK (
) -- On Friday's episode of his "Mad Money" TV show, Jim Cramer warned viewers about trading in the "wild west" of after-hours trading. He said there are big hazards in the after-hours markets, and most who trade there, lose big.
Cramer used Thursday night's after-the-bell earnings from
Chipotle Mexincan Grill
, to illustrate how trading after hours can go horribly wrong.
Shortly after the close,
Buffalo Wild Wings
reported what Cramer characterized as a truly disappointing quarter. Almost immediately thereafter, the stocks of Panera and Chipotle shot lower in sympathy with Wild Wings. After their earnings were released, the headlines for Panera and Chipotle also read of "disappointing" quarters, and the stocks continued to plunge.
But Cramer noted that anyone who traded on the headlines was dead wrong. In fact, Panera actually raised guidance on strong same-tore sales. Chipotle had a remarkable quarter, beating expectations by 18 cents and announcing big international expansion plans. During the regular trading session today, Panera rose $4 a share, while Chipotle shot up $10 a share from its after market lows yesterday.
Cramer said the lesson is that investors need to learn how the company is really doing before making a trade. "Trade the headlines," he said, "and get hurt."
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That's why for next week's game plan, Cramer said he's listening to, and not trading on, the earnings of
( WFMI) to see if consumers are opting for more private label brands. He's watching
for a view of the natural gas industry and
to see if that company's cost problems have been fixed.
Cramer said he'll also be listening to both
( BUCY) and
for news on those industries as well.
A Speculative Chip Play
For "Speculation Friday," Cramer featured the semiconductor materials maker
, a $4.86 stock that has the analysts split on its future prospects.
The bears say the recent strength in Entegris is due to a cyclical trend that has already played itself out. With valuations up, the bears feel it's time to sell.
But the bulls, and Cramer, see the outlook for Entegris completely different. Cramer sees a multi-year move in semiconductors, as consumers can't get enough smartphones, tablets and netbook computers. Unlike 2004, when there was a bubble in the semis, inventory levels are low industry wide, and businesses have just begun their upgrade cycle.
Cramer said Entegris' business is highly leveraged to the number of semiconductors produced. The more chips that are made, the more money the company makes. With sales up 30% year over year, and strong sales continuing, Cramer said this stock should be valued at $9 a share.
Looking for a stock that's so confident in its business that it can triple the size of its dividend? If so, then Cramer said investors need to look into
, which did just that, raising its dividend from four cents a share to 12 cents, giving it a 2.1% yield.
Cramer said nothing says "business is great" more than management boosting its dividend. In the case of Wyndham, management said it plans to grow its dividend at the same rate as its earnings, currently 14%, which means there are more good things to come.
Wyndham is expected to earn $1.62 a share in 2010, giving it ample revenue to pay its dividend three times over. The company also has $155 million in cash and no major debt coming due in 2010. Better still, Wyndham also reinstated its stock repurchase program to further reward its shareholders.
Cramer called Wyndham's business model of offering fee-based services for owners of timeshare properties "brilliant," and so much better than taking on debt to build huge hotels. He gave the stock his blessing, calling it a buy, buy, buy.
Navigating Rough Seas
In the "Executive Decision" segment, Cramer spoke with Herbjorn Hansson, chairman and CEO of
Nordic American Tanker
, a stock that has been stuck in the mud since announcing a secondary stock offering and slashing its dividend.
Hansson explained that Nordic American's strategy is to make a lot of money when the market is up, and when the market is down, use the time to buy more ships, which is exactly what it has been doing. He said Nordic American is a play on the world economy and there are bright spots on the horizon.
Hansson said there's always a focus on the U.S. economy, but he's most excited about the BRIC countries of Brazil, Russia, India and China. He said Nordic American is in an excellent position to capitalize on those markets.
When asked if the markets could once again see day rates for tankers reach their highs of $30,000 a day, a time when Nordic American was paying out record dividends, Hansson said absolutely.
Cramer said if investors want tankers, they want to own Nordic American Tanker.
Cramer was bullish on
He was bearish on
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was not long any stock mentioned.
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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