"The housing bubble is dead," Jim Cramer declared on his "Mad Money" show Monday evening. The second-home market in particular is being hit by a triple whammy of rising oil and gas prices, rising raw materials costs and rising interest rates, Cramer said. And Cramer believes that is good news for Merrill Lynch ( MER) and Charles Schwab ( SCH), as individual investors take their money out of real estate and put it in the stock market. Cramer is also bullish on E*Trade ( ET - Get Report) and Ameritrade ( AMTD) for the same reasons.
Connecting With ConexantCramer's stock of the week is Conexant Systems ( CNXT - Get Report). His reasoning is this: JDS Uniphase ( JDSU), a stock that has been "awful," rallied 7% Friday after Citigroup upgraded it. Thus, "if it's time to stop hating JDSU, it's time to start buying CNXT," said Cramer. Conexant makes chips for DSL modems, optical communications, Wi-Fi and satellite television set-top boxes. Cramer sees Conexant earning 20 cents to 40 cents a share next year. At $1.63, where the stock ended the regular trading session Monday, it isn't expensive, said Cramer. A caller wanted to know if she should sell Intel ( INTC) to buy Conexant. Cramer said Intel should be held. Conexant is a speculative trade, he said. Intel is an investment. For a "safe" way to make money on the trading of derivatives, Cramer is bullish on GFI Group ( GFIG). First, the market for derivatives has been growing at an annual rate of 31% since 2001, said Cramer, and GFI is a pure play on this market. Second, GFI just created a new market for derivatives with CB Richard Ellis ( CBG) based on European commercial real estate. "I don't know how well this will do," said Cramer. "But, even if the real estate bubble is popping, interest in it is going to be pretty high." The new business is just "mildly" profitable, said Cramer, but "it's a brand new growth engine for GFIG."
After-the-Bell ReverberationsCommenting on news after the close, Cramer said Maytag's ( MYG) preannouncement of an earnings shortfall was "really awful" and will also hurt Whirlpool's ( WHR - Get Report) stock tomorrow. \ Tempur-Pedic's ( TPX - Get Report) negative preannouncement that its business is being hurt Hurricane Katrina "raises eyebrows," said Cramer. "You should just sell the stock." StemCells ( STEM), "which had good things to say... about human stem cells" will put President Bush on the "hot seat." And, finally, of Procter & Gamble ( PG), Cramer said, "Amen. A company that did not blame Katrina and said it's still going to be able to do its quarter." In response to a question about Oneok ( OKE - Get Report), Cramer said, "I'm doing a 'mon back because they just sold $600 million worth of properties after the bell. That stock goes higher." In response to an email question about Sears Holdings ( SHLD), Cramer reiterated he owns the stock (in his charitable trust,
'Lightning Round'Bullish Cramer was bullish on: TurboChef Technologies ( OVEN), Time Warner ( TWX), Icici Bank ( IBN), Pioneer Natural Resources ( PXD - Get Report), Cisco Systems ( CSCO - Get Report), Tata Motors ( TTM), American Science and Engineering ( ASEI), L-3 Communications ( LLL), Thermo Electron ( TMO - Get Report), Grey Wolf ( GW), Cypress Semiconductor ( CY - Get Report), Genesis Microchip ( GNSS), IntraLase ( ILSE), Ameren ( AEE - Get Report), LSI Logic ( LSI - Get Report), Fortune Brands ( FO), Sprint Nextel ( S - Get Report), UGI ( UGI - Get Report) and National-Oilwell Varco ( NOV - Get Report). Bearish Cramer was bearish on: Starbucks ( SBUX - Get Report), Great Wolf Resorts ( WOLF), Novell ( NOVL), Amkor Technology ( AMKR - Get Report), Coeur d'Alene Mines ( CDE - Get Report) and EMC ( EMC). *For all you home-gamers, a 'mon-back opportunity means Cramer would back up the figurative truck and load up on a stock.
Interested in more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here. It's a series of articles from Cramer on how to become a better investor. The following table lists some of the rules that Cramer dissects.
|1.||Pigs Get Slaughtered||2.||It's OK to Pay the Taxes|
|3.||Don't Buy All at Once||4.||Buy Damaged Stocks|
|5.||Diversify to Control Risk||6.||Do Your Homework|
|7.||Don't Panic||8.||Buy Best-of-Breed|
|9.||Defend Some Stocks||10.||Don't Bet on Bad Stocks|
|11.||Own Fewer Names||12.||Cash Is for Winners|
|13.||No Regrets||14.||Expect Corrections|
|15.||Know Bonds||16.||Don't Subsidize Losers|
|17.||No Room for Hope||18.||Be Flexible|
|19.||Quit When Execs Do||20.||Patience Is a Virtue|
|21.||Be a TV Critic||22.||When to Wait 30 Days|
|23.||Beware the Hype||24.||Explain Your Picks|
|25.||Find the Bull Market|
|Check back for more of Cramer's Rules|