Jim Cramer's Best Blogs

Catch up on his 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 trap of "cheap" stocks,
  • managed care on the move, and
  • a counterintuitive rally.

Click here

for information on

RealMoney

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

Stocks Are 'Cheap' -- But That Isn't Enough

Posted at 9:45 a.m., Feb. 2, 2009

You always need some sort of thesis, some worldview, to make you buy stocks. You can say, "With the amount of money being pumped in, something good can happen." Or you can say, "Stocks are cheaper than they have been in years." You can see

Alcoa

(AA) - Get Report

,

Textron

(TXT) - Get Report

,

International Paper

(IP) - Get Report

-- great American companies in single digits -- and conclude, "You have to buy something."

And then you look at what's underneath: a stimulus plan that's stimulates next to nothing, not even

Wal-Mart's

(WMT) - Get Report

earnings, it is that small; stocks of companies that no strategic buyer can afford to buy and the

Blackstones

(BX) - Get Report

-- see that stock's price? -- aren't able to either, even though they claim they can; and the debt situation of all of these single-digit stocks, which require bankers and bond holders to show forbearance and let things roll until the economy gets better. The research is equally as negative, hence the downgrade

down

here of IP over at Goldman Sachs.

I keep coming back to this Textron quarter. They have so much money due that I don't see how they can justify saying it's not a problem. Textron reminds me of another lender that's been chronically short of capital:

CIT

(CIT) - Get Report

. If you follow the CIT route, then you know that means you need more capital and the equity market is the logical one to tap, hence why Textron's common stock is down to 9.

The aggressive shorts and the scared longs look at any company that has debt coming due or needs more credit, and presumes that the money will not be there.

Last week, for instance, I heard that some smart short-sellers were buying credit default swaps on

JC Penney

(JCP) - Get Report

to freak people out -- yes, that's legal as they are currently configured -- swaps which then crushed the common. That triggers worries from the agencies, which spikes the cost of borrowing, which makes the company -- unless it has a great quarter -- susceptible to all sorts of whims in credit markets.

This process is playing out everywhere, so it makes a worldview of cheap stock buying coupled with government-stimulated demand seem like a false theory to base buying on.

Until something "good" happens, we will be in more of the same territory, relentlessly, and that means days where you simply can't afford to take advantage of the dips without risking annihilation.

Random musings

: If you really believe in the energy portion of the stimulus package, you should believe in

Owens Corning

(OC) - Get Report

as an insulation play -- there's money in the bill for it. I don't think it works because of the decline in oil prices. But at least it's a play on it!

At the time of publication, Cramer was long Goldman Sachs and Wal-Mart.

Don't Miss the Move in Managed Care

Posted at 12:16 p.m., Feb. 3, 2009

If you save costs in health care, the market is giving you the benefit of the doubt. I write that because there is

nothing

happening whatsoever that's really good at

UnitedHealth

(UNH) - Get Report

or

Humana

(HUM) - Get Report

or

Aetna

(AET)

, but they are loved, just loved, because Obama

isn't focused on them

and they are a way out of spending more on health care. They rein in costs.

Which brings me to a stock that Doug Kass likes, that I believe could explode here (and I don't think $1.67 on the plus side is the explosion):

Medco Health

(MHS)

. This is a company that has been hamstrung by pharmacists, who certainly have a place in the economy but who need to be forced, kicking and screaming, into a world where bulk buying makes the most sense.

We don't bulk buy for the government, something that has been a huge issue for a very long time by the Democrats. However, I don't hear them pushing now for anything like that.

But, if they are smart, they should let citizens use mail orders to Medco, which would truly save BILLIONS toward pharma, which is a gigantic cost to this country that can be saved.

I believe that this change will occur. In the meantime, we know there are so many generic drugs coming off patent that I have to believe you can win even without this.

But I really think it is important not to miss the next UnitedHelth/Aetna/

WellPoint

(WLP)

, even though one could argue that there is more to those moves.

I just really, really like this stock here. More upside for certain.

Random musings

: Some growth stocks are getting some mojo -- like

Salesforce.com

(CRM) - Get Report

-- which matters. It's been a while.

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

The Case for a Counterintuitive Rally

Posted at 12:30 p.m., Feb. 5, 2009

Wal-Mart

(WMT) - Get Report

serves as a big umbrella for a lot of retailers. We now realize that the numbers from

Costco

(COST) - Get Report

and from, well, Wal-Mart before this, may be too downbeat. And those that have any success at all, like

Urban Outfitters

(URBN) - Get Report

,

Ross Stores

(ROST) - Get Report

and

TJX

(TJX) - Get Report

-- as opposed to the dollar stores -- are getting a higher multiple on their somewhat consistent earnings.

Dollar Tree's

(DLTR) - Get Report

a tough one because the trade-down theory is at work everywhere except, perhaps, at the ultimate trade-down. I wonder if it is execution, and I know that

Family Dollar

(FDO)

has some margin improvement to come, so it might make a good buy down 2.

Now, we also see that

Visa

(V) - Get Report

and

MasterCard

(MA) - Get Report

-- two hedge fund faves -- are able to be generals for retail, even though those who know these companies understand these are secular plays on the switch from paper to plastic.

We also have something interesting happening in natural gas: the weather.

Duke Energy

(DUK) - Get Report

confirmed that more power is being used -- that's something that had become questionable with the slowdown, and it is being used to heat homes. Natural gas rallies could make a lot more stocks investible than we thought.

All of these "bullish" signs are being played out here, and that makes it so a rally can be developed counterintuitively, because

Cisco's

(CSCO) - Get Report

outlook was devastating and the "Break

Bank of America

(BACA)

/

Wells Fargo

(WFC) - Get Report

/

JPMorgan

(JPM) - Get Report

" crowd is working its black magic...

At the time of publication, Cramer was long Wal-Mart, Cisco, Wells Fargo and JPMorgan.

Jim Cramer is co-founder and chairman 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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