'RealMoney' Radio Recap: Chipper on Chips

Texas Instruments' blowout quarter is good news for companies throughout the economy, Cramer tells listeners.
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It's time to get out of shoes and into the SOX, James Cramer said on his

"RealMoney" radio show.

Tuesday's selloff in

Timberland

(TBL)

points to big problems in the footwear business, ranging from hefty competition to inventory gluts, Cramer said. But the semiconductor index, known as the SOX, is another story altogether, Cramer said.

He cited

Texas Instruments'

(TXN) - Get Report

great numbers as a case in point. Cramer said the chipmaker's gains are good for stocks from

Best Buy

(BBY) - Get Report

to

Motorola

(MOT)

. Cramer said he fully expects

Intel

(INTC) - Get Report

to resume its climb as well.

"Convergence in the electronics industry is growing," says Cramer. "Devices are chock full of semiconductors."

Cramer said he didn't have anything good to say about semiconductors for three years, but that's changed. He now sees a gamut of companies to choose from, including

National Semiconductor

(NSM)

,

Marvell Technologies

(MRVL) - Get Report

and

Broadcom

(BRCM)

. "This is an excellent sector and you need to be in it," Cramer said.

If you need to pick a single company to buy, Cramer said, just pick Intel, which is building factories in Arizona and Israel. "They would not build these plants if they did not have the demand," Cramer said.

Meanwhile, "The shoe business is not going away," said Cramer. "

Nike

(NKE) - Get Report

and

Reebok

(RBK)

have been fairly steady performers and Timberland has plenty of cash, but inventories are still too high."

Danger Zone

The big three phone companies were in Cramer's danger zone today. Cramer slapped sell recommendations on

Verizon

(VZ) - Get Report

,

SBC Communications

(SBC)

and

BellSouth

(BLS)

.

Here's why: Skype. Cramer called Skype "a virus for the phone companies that can't be stopped." The closely held company makes software that allows you to make free calls over the Internet.

"It's made up by the guys that killed the record industry with Kazaa," said Cramer. "Only this time they won't have any legal liability, but nobody's talking about it."

The news will soon spread, said Cramer. And in another blow to the landline phone companies,

Comcast

(CMCSA) - Get Report

and

Time Warner

(TWX)

are offering cheap phone service.

Cramer thinks some people may argue that the Bells will develop their own voice over Internet protocol projects. But in his opinion, as long as the prices get pushed down, those guys are dead. "Anybody with landline exposure will get destroyed," Cramer said.

Oh, and watch out, holders of beverage maker

Hansen Natural

(HANS)

. Cramer said the stock may still have upside, but it may end up in the danger zone soon.

Calling Cramer

Cramer said

Equitable Resources

(EQT) - Get Report

is a premium natural gas play. "It's worth far more than its current $71 price," he said.

On the other hand, he wasn't excited about

RF Micro Devices

(RFMD)

, which he said will rise only in line with other tech stocks. But

Cisco Systems

(CSCO) - Get Report

has "one point down and six up" in Cramer's book. "It's only a matter of time before it gains strength," he said.

Sector Spotlight

Put simply, supermarkets are bad, drug stores are good.

Cramer told listeners to take

CVS

(CVS) - Get Report

and

Walgreens

(WAG)

over

Rite Aid

(RAD) - Get Report

any day of the week. "At this point Rite Aid is being bounced around as a short-term trade," he said.

Cramer advised his audience to ring the register on

Performance Food Group

(PFGC) - Get Report

, where "margins are razor thin."

But said he likes

7-Eleven

(SE) - Get Report

, which he called "a great stock which will remain hot."

In the battle between

BJ's Wholesale Club

(BJ) - Get Report

and

Costco

(COST) - Get Report

, Cramer said both are good but if pushed would choose Costco because of its dominance in the "wholesale market, which grows faster."

Finally, Cramer said another sector he is bullish on is eye care. He recommended stocks including

Bausch & Lomb

(BOL)

,

Alcon

(ACL)

and

LCA Vision

(LCAV)

.

At the time of publication, Cramer was long Comcast, Intel and Motorola.

James J. 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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