It's time to get out of
, Jim Cramer said on his
"RealMoney" radio show Friday.
In this kind of situation it's advised to do your homework and research the company, he said. Although the company may appear to look good to you, it may not be performing well across the board.
Fifteen months ago, Cramer thought Urban Outfitters was the best retailer in its industry.
The company, which operates under three divisions (Urban outfitters, Free People and Anthropologie) didn't seem to be performing so well last summer. The stock dropped, and Cramer viewed the company as a bargain, he said.
But after doing storewide research, it was revealed that the company had an inventory problem, where they were not selling enough clothes in time for a new season.
In short, the company had high inventory, the wrong merchandise and sales were down, Cramer said. Now the stock has fallen, but along with it, the company's fundamentals have fallen apart. Even though the company's stock is at $18, it is a sin to buy when the company is awful, he said.
"We don't know what it is, but something is wrong with Urban Outfitters," Cramer said. "You need to get out of this stock."
Cramer advised his listeners not to rely on news too much. While news headlines keep reporting that Bill Gates has taken a lesser stance on
, which Cramer owns for his charitable trust,
Action Alerts PLUS, and is spending more time giving his money away, this is not the real news, he said.
The reality is that CEO Steve Ballmer, who has already been running Microsoft for some time now, has not done anything special at the company. The stock is at its five-year low. The real story is that this stock is not doing well, and the company is not coming out with new products.
Cramer said he likes
for the reason that the company keeps up with up-to-date systems.
The press also is too focused on old tech, Cramer said. Both
are old tech companies.
But what about
, which Cramer owns for his charitable trust,
Action Alerts PLUS and
? he asked.
These are companies with new products that the media should focus on, he said.
Coming Up Short
Although every headline about the upbeat market on Thursday said it was triggered by Ben Bernanke, the
's chairman, this is not true, Cramer said.
Short-sellers are what caused the rally, he said.
"Bernanke spoke at 2 p.m.
EDT yesterday," he said. "The market was already up by then." He is not the reason the market rebounded, he said.
There is a big group of people that bet against the market every day called short-sellers; they want the market to be lower, and sometimes they get it right, Cramer said. In fact, they were right nine straight days while the market was down.
Then individual companies like
reported good news. This caused the market to begin to spring back, Cramer said.
"People who had been coining money at your expense were pressing their bets", he said. "At the top of the market yesterday, the short-sellers came in and bought back stock and that's what caused the rally."
Now what people are doing is becoming more defensive, he said. Cramer advised his listeners to start buying companies that are doing well, even when the economy is not doing well.
Take a look at your portfolio, Cramer said. If you made a lot of money yesterday, if you experienced a 4% or 5% gain yesterday, you are doing something wrong, he said. If you made a lot of money it mean you are being too risky, he said, in which case you need to scale back the risk.
Be diversified, Cramer advised. Take a little off the table and redeploy it, he said, maybe into a drug stock like
or a beverage stock like
"Make these moves when the market is strong," he said. "We're back to full price, this is when I like to sell."
Caterpillar recently made a statement when it held a shareholders' meeting in which it declared that the company's business is "smoking good" and its stock is too cheap, Cramer said.
The company raised its dividend, he said, advising a caller to the show that it's not too late to buy Caterpillar's stock.
reported a great quarter, but people also learned that the company's New York stores were not performing too well, Cramer told a caller, who inquired about it.
Ten days ago,
came out and said they have too much inventory.
Since AU Optronics manufactures and sells the liquid used in LCD TVs, people thought its inventory must be high because Best Buy wasn't doing well.
Everyone began selling Best Buy, but in fact, even though the company's New York stores were underperforming, Best Buy was doing great overall and it was revealed that AU Optronics' inventory problem was caused by
Best Buy is a good story in a down market, Cramer said, but it is not a buy right now.
Although Cramer told a caller he has taken a terrible beating with
, which he owns for his charitable trust,
Action Alerts PLUS, he believes the worst is over for this company.
What happened is that bankers convinced Gene Eisenberg, the company's CEO, that he could borrow money to buy back stocks, Cramer said, and overnight the stock went from $36 to $28. It was a wrong move and the stock has come down a lot since then, he said. But Cramer said he believes the damage has been done and recommends buying the stock. "I would buy," he said.
It is the best driller in the world, he said.
Cramer told a caller he believes the fall will be a good time for
. The stock has real value and Cramer said he has never seen it cheaper that it is now.
is a "dog," Cramer said, adding he likes
He also told the caller to get out of
because it's too dicey and move into
Cramer gave two thumbs "way up" to
and told a separate caller to wait for
Bank of America
to go a little lower before buying.
At the time of publication, Cramer was long Microsoft, Nabors and Network Appliance.
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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