Jim Cramer's Best Blogs - TheStreet

Jim Cramer's Best Blogs

Catch up on his latest thinking on the hottest topics of the past week.
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Jim Cramer fills his blog on

RealMoney

every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week, he blogged on:

  • the five stocks to watch;
  • getting the oil game plan;
  • the supply squeeze behind the surge;
  • a 'what works' shopping list; and
  • long-term defense-stock picks.

Click here for information on

RealMoney.com

, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

Five Stocks to Watch This Week

Originally published on 4/23/2007 at 7:02 a.m.

We could use a breather here. I just don't know if we will get it.

So many stocks went up so much last week that you could argue that too many were propelled by the machinations of options expiration. I just don't believe we should see so many stocks that didn't report great quarters as high as we have seen them.

We had a lot of

Dow

stocks, like

Honeywell

(HON) - Get Report

,

United Technologies

and

Merck

(MRK) - Get Report

, just roar upward a huge number of points without any profit-taking whatsoever.

It is entirely possible that those leaps will have firm footing. We have seen that happen during the periods when we have tacked on 1,000 points in the Dow. But right now there's no skepticism whatsoever about this move, and I can't recall moves that were permanent where you didn't have more skepticism.

This is a key week. There are no expiration games. I am keying on these stocks that reported just so-so earnings in the last few weeks to determine whether it was expiration that drove things, particularly Friday:

    Nike

    IBM

    FedEx

    Illinois Tool Works

    United Health

    These companies all started going up at the end of the week, and I think they were simply swept up by futures. If they begin to go down we will get a sense that a non-futures related market may not be as robust as last week and could be vulnerable. It's the weak companies that fail first in a repeal of a good run.

    Let's take a look.

    Random musings:

    The strong bond market, which was not supposed to be in the cards for the perma-inflationists, of which there are many, gave an extra boost to the high multiple companies last week -- everything from

    Intuitive Surgical

    (ISRG) - Get Report

    to

    Google

    (GOOG) - Get Report

    . If we go to 4.5% on the 10-year, I think we will get another wave upward.

    At the time of publication, Cramer was long UnitedHealth Group.

    Get the Oil Game Plan

    Originally published on 4/24/2007 at 11:17 a.m.

    After all the talk about energy independence and more drilling and a sense that there's oil, oil everywhere, we find once again that we are always one producer away from the posse. Nigeria, yes, Nigeria, can take us perilously close to $70. You get Nigeria and Venezuela off their games and you are in the mid-$70s per barrel of crude.

    That's why you can still buy drillers, something that you're getting a chance to do off the

    BJ Services

    (BJS)

    quarter. I know that

    Halliburton

    (HAL) - Get Report

    is like BJ and I have

    no

    expectations for this quarter. I also know that the international drillers --

    Transocean

    (RIG) - Get Report

    and

    GlobalSantaFe

    (GSF)

    work best -- and that

    National Oilwell Varco

    (NOV) - Get Report

    makes a ton of sense.

    But I also have to caution that oil going higher is still a gigantic negative for so many companies that you can expect it to be a damper until we see the

    Fed

    reacting to the new tax on the consumer -- at the pump -- and make a move that is so darned necessary.

    So, the takeaways: International oils now, domestic drillers after these quarters (go read

    Schlumberger's

    (SLB) - Get Report

    quarter if you disagree) and oil and gas plays, domestic and Canadian, in the third quarter.

    Random musings:

    Is there any season when

    Medco Health Services

    (MHS)

    can't be right? Kudos

    again to

    Dave Peltier with another great call:

    ATP Oil & Gas

    (ATPG)

    , right on top of

    Hasbro

    (HAS) - Get Report

    and

    Oakley

    (OO)

    .

    Click here to see more of his picks.

    At the time of publication, Cramer was long Halliburton and Transocean.

    Tight Supply Squeezes Market Higher

    Originally published on 4/25/2007 at 11:26 a.m.

    Where the heck is all of the supply? For six years stocks have meandered with sellers

    always

    above the current prices. That caused an endless chew-through that often could

    not

    be eaten.

    How many times have you seen big upside surprises and gotten nothing special in the stock's price action, maybe a point up, and then two weeks later, the sellers would be back, motivated and blowing out of shares. This is the concept, if you have ever traded institutionally, of having heavy offerings that serve as a roof and then, in a few days, you get the sellers off the offering and hitting the bids.

    Now, you have the opposite. Whether it's today's

    Amazon

    (AMZN) - Get Report

    ,

    Aflac

    (AFL) - Get Report

    ,

    Air Products

    (APD) - Get Report

    ,

    Black & Decker

    (BDK)

    or

    Bard

    (BCR)

    , or all-week stocks such as

    Honeywell

    (HON) - Get Report

    ,

    Paccar

    (PCAR) - Get Report

    ,

    Cummins

    (CMI) - Get Report

    or

    Whirlpool

    (WHR) - Get Report

    , you have limited supply. That's how you get these gigantic one-day moves that are then

    not

    repealed.

    Earlier today I

    opined that if you just willy-nilly buy back stock without a sense of cheapness, you waste shareholders' money. But if you have conviction, as

    all

    of the companies mentioned here have, you get a delicious combination of buybacks that

    have

    taken out excess supply and institutions that can't get in without paying up.

    But let's add in something else, something truly amazing, an away team that gets blown out by these numbers. That's the hedge funds. They are providing the offerings

    ahead

    of many of these quarters -- check out Amazon -- and just borrowing that inventory, and have to buy it back much higher.

    It's amazing to me, as someone who has had to ask for offerings to buy stocks when I wanted to buy them in size, how few firms will even offer stocks. They don't want to be in short supply. So the supply can't be found until you take stocks up two, three or four points in a session, or even 10 points over a multiple days.

    (Classic that when B&D went up $5 last week, it was from institutions furiously trying to build positions

    and

    shorts trying to cover. Not enough stock to go around, like Whirlpool.)

    We saw these patterns with a lot of stocks during 1999 and 2000: tech stocks. They were heavily shorted and there was no supply. But before you make the analogy to them, let's remember that the supply did come out, in the form of secondaries. IPOs were artificially limited to get the stocks higher, and the earnings weren't there to generate enough cash to sop up the supply.

    Now, I'm not even talking about the private-equity put that keeps a bid underneath stocks. Nor am I talking about the incredible merger movement, one that I think will accelerate as the dollar gets weaker. I also am not including the possibility that the

    Fed

    recognizes the weakness in America and flushes cash into the market through lower interest rates.

    I am not addressing companies that want to create value by breaking up because they can't take the heat:

    Alcoa

    (AA) - Get Report

    ,

    Temple-Inland

    (TIN)

    and

    American Standard

    (ASD)

    , to name a few.

    Nor am I thinking about the activist hedge funds that force unlocked value on companies such as

    Time Warner

    (TWX)

    ,

    MedImmune

    (MEDI)

    and the aforementioned Temple-Inland.

    Of course, all of these are driving this excellent market. The important thing to remember is that this is the

    first

    quarter we have had this combination.

    When I

    came up with my aggressive target of 14,500 for the

    Dow

    at the end of 2006, I didn't even include a lot of these amazing factors. I now

    begin to believe that I am being

    too

    conservative, but I will stick with it anyway given, distinctly happy if we beat it.

    Random musings:

    Is

    Halliburton

    (HAL) - Get Report

    going to be

    Baker Hughes

    (BHI)

    -- the old analogue -- or

    BJ Services

    (BJS)

    , the new one, which is just a pure play on Halliburton's worst division. We do have 100 million-plus shares short and reduced expectations. The company has yet to buy back a share of its stock from the

    KBR

    (KBR) - Get Report

    deal. But we also have a management that has been totally incapable of bringing out any value to speak of. ... I read Black & Decker's power tool strength as being positive for

    Sears

    (SHLD)

    . Remember, it was

    that

    division that kept things back, not apparel. I know Sears makes Kenmore, which is really Whirlpool, and Whirlpool made it clear that it wasn't doing well domestically, but I remain convinced that Sears will do much better than

    Target

    (TGT) - Get Report

    ,

    Home Depot

    (HD) - Get Report

    or

    Lowe's

    (LOW) - Get Report

    . ... I think the

    Limited

    (LTD)

    breakup story is real and you will see $31-$32. ...

    Corning

    (GLW) - Get Report

    is

    Level 3

    (LVLT)

    as I have said earlier. ... How maddeningly inconsistent is

    Panera

    (PNRA)

    ? It's worse than

    3M

    (MMM) - Get Report

    . ... These health maintenance companies, like

    WellPoint

    (WLP)

    , have become toxic again, as opposed to the

    Medcos

    (MHS)

    of the world. ... U.S. beer for

    Anheuser-Busch

    (BUD) - Get Report

    looks like U.S. sodas for

    Coke

    (KO) - Get Report

    and

    Pepsi

    (PEP) - Get Report

    . ... Could

    Tellabs

    (TLAB)

    be in talks with

    Alcatel-Lucent

    (ALU)

    ? What else would explain those increases? ... How easy was that darned

    VF Corp.

    (VFC) - Get Report

    ? I think

    Allergan

    (AGN) - Get Report

    , which reports on May 3, is the next big upside beat in health care. ...

    Transocean

    (RIG) - Get Report

    remains

    the cheapest driller, even up here. ...

    Caterpillar

    (CAT) - Get Report

    is resting before the next big move. ...

    Moody's

    (MCO) - Get Report

    is fine. I would buy it.

    At the time of publication, Cramer was long Halliburton, Sears Holdings, Transocean and Caterpillar.

    Stick With 'What Works' Shopping List

    Originally published on 4/26/2007 at 10:37 a.m.

    Stick with the themes. Don't drift.

    Capital goods aren't done. This was their first good quarter of rest-of-world activity. I'm thinking:

    Health care works, on a recognition that a weak dollar and cost cuts are producing blowout numbers:

    Merck

    (MRK) - Get Report

    ,

    Schering-Plough

    (SGP)

    ,

    Zimmer

    (ZMH)

    ,

    Allergan

    (AGN) - Get Report

    .

    Oil drillers are so right, as long as they are far from here:

    Schlumberger

    (SLB) - Get Report

    ,

    GlobalSantaFe

    (GSF)

    ,

    Transocean

    (RIG) - Get Report

    . Some oils work:

    ConocoPhillips

    (COP) - Get Report

    is cheap, and I'd take

    Exxon

    (XOM) - Get Report

    on a pullback.

    Telecom works:

    AT&T

    (T) - Get Report

    and

    Verizon

    (VZ) - Get Report

    .

    And materials work:

    Freeport-McMoRan

    (FCX) - Get Report

    ,

    BHP Billiton

    (BHP) - Get Report

    ,

    Lundin Mining

    (LMC)

    ,

    Alcoa

    (AA) - Get Report

    .

    Ag works:

    Deere

    (DE) - Get Report

    ,

    Monsanto

    (MON)

    ,

    DuPont

    (DD) - Get Report

    ,

    Mosaic

    (MOS) - Get Report

    .

    International brokers work:

    Goldman Sachs

    (GS) - Get Report

    ,

    Lehman

    (LEH)

    and

    Bear

    (BSC)

    are my faves.

    Household products work:

    Pepsi

    (PEP) - Get Report

    ,

    Coke

    (KO) - Get Report

    ,

    Clorox

    (CLX) - Get Report

    .

    Beyond that, I wish I didn't have to say this, but I think you are on your own.

    At the time of publication, Cramer was long Caterpillar, Transocean, Freeport-McMoRan, Goldman Sachs and Clorox.

    Shoot for the Long Term With Defense

    Originally published on 4/27/2007 at 11:31 a.m.

    Here go the defense stocks again, with

    Lockheed Martin

    (LMT) - Get Report

    rallying nicely. These companies seem to trade in a very strange pattern: They deliver great numbers, raise guidance and then start retreating when everyone thinks the numbers can't be sustained and the Democrats will bust up the party.

    They are just like the drug stocks!

    But in some ways, they're better. You should go listen to the LM call. Not only are the earnings consistent but the programs are so long-term that anyone who is concerned about a Democratic slowdown is just wildly off base.

    Plus, the headline risk -- Lockheed Martin has taken endless heat for one program, the Littoral Combat Ship program -- that you would think it was in the penalty box with Washington. Totally untrue. LM has 3,000 programs, and this is the only one that has been hit with really bad publicity.

    To me, LM and

    General Dynamics

    (GD) - Get Report

    and

    L-3

    (LLL) - Get Report

    and

    Northrop Grumman

    (NOC) - Get Report

    should be bought. They haven't kept up, they are all doing well and I think they will continue to do well for several years hence.

    Random musings:

    Speaking of being late to the party, if you still want to play something

    Cummins

    (CMI) - Get Report

    -like, I'd go for

    Parker Hannifin

    (PH) - Get Report

    , which is just now playing ketchup!

    At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.

    Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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