Buy ATI Technologies ( ATYT) now and sell it in a month, Jim Cramer said on his "Mad Money" TV show Thursday evening. In 27 days, Microsoft ( MSFT) will launch the Xbox 360, and Cramer expects initial sales to be big. ATI makes graphics cards for the Xbox 360, and ATI's stock should spike on the console release, Cramer said. That's when you should ring the register. This trade isn't about fundamentals, it's about hype, said Cramer. There is nothing in the next 30 days that is going to make ATI any money. The orders from Microsoft already have been filled, he said. "It's OK ... to trade on hype as long as you're smart about it," said Cramer. The bank doesn't care if you make money on "the worst kind of hype." Be smart about buying, though, cautioned Cramer. Don't pay up for ATI's stock tomorrow morning. Wait for sellers to come in before buying, he said. A caller wanted to know if Microsoft would make money on its new Xbox because the first version wasn't a big win financially. Cramer said the first Xbox wasn't a big leap technologically over the other Japanese video game consoles. This time it's different. The new Xbox 360 is a "quantum leap over the other guys," he said. In addition, lots of games will be written this time for the new Xbox 360, which is key, said Cramer, who also believes Microsoft's new Vista PC operating system with "instant on" technology will be big. Cramer likes Microsoft for investment. He would buy some now and look to buy more if the stock falls.
Samurai Companies in Driver's SeatCramer added Honda Motor ( HMC) and Toyota Motor ( TM) to his "Seven Stock Samurai," seven Japanese stocks Cramer wants you to own. Honda and Toyota join Mitsubishi UFJ Financial Group ( MTU) and Kirin Brewery ( KNBWY) in the soon-to-be-completed list. Honda reported an excellent quarter Thursday that was "good by the standards of any mature business," said Cramer, not just by the standards of the struggling American auto companies, Ford ( F) and General Motors ( GM). Honda and Toyota are "not just the best houses in a bad auto industry neighborhood. These guys packed up and moved somewhere else," said Cramer. Of the two, Cramer prefers Toyota, which he says has a leg up on hybrids. But both companies are profitable and both are benefiting from the long-term trend of higher gasoline prices, said Cramer. Toyota and Honda aren't just in a different league, "they're in an entire different ballgame," he said. In response to a question about DaimlerChrysler ( DCX), Cramer said he was "impressed with the Daimler quarter," but it is not as good as Toyota or Honda. It isn't worst of breed, but he can't think of a reason to pull the trigger and buy.
Mind the Seasonal Cycle in HMO StocksCramer remains bullish on UnitedHealth Group ( UNH) not just for the changes in Medicare, which he believes will result in accelerated earnings growth in 2006, but for the trend in HMO stocks that has been in place in November through March for the last four years. HMO stocks have fallen every year in October for the last four years on worries about next year's pricing, he said. The stocks are off an average of 3.3% with some much bigger declines, said Cramer. They, however, have bounced right back every November with the group up an average of 13% the past four years. From November through March, the group is up even more -- an average of 29% the last four years, said Cramer. Additionally, UnitedHealth should do much better than the average because it has invested so much more than its competitors in the health-care information "arms race." It has spent hundreds of millions more even than its nearest competitor, WellPoint ( WLP). UnitedHealth is going to run its competition into the ground like Procter & Gamble ( PG) did to Colgate-Palmolive ( CL) and Kimberly-Clark ( KMB), said Cramer.
Housing Pausing?Ken Heebner, portfolio manager of the ( CGMRX) CGM Realty Fund, joined Cramer on the show. Cramer asked Heebner about Donald Trump's comments yesterday during Cramer's "Mad Money's Main Event II" on the strength of the high-end housing market. Heebner said Trump has "a lot of high-end housing for sale. I understand why he's bullish. He wants to sell it to us. "But, no. I think we've got a real problem in high-end housing," he said. For the first time in the last 50 years, said Heebner, there has been a "20% to 50% decline" in high-end housing in about 10 of the strongest high-end housing markets, he said. Are housing stocks finished, then? asked Cramer. "They're going to take a pause," said Heebner. "They're going to have a disappointing environment, particularly at the high end," adding that he believes the earnings will decline. "What is the trigger for your bearish view?" asked Cramer. Heebner said "extreme financial speculation" at the high end is the culprit. The price level has been driven up by speculators and people bidding for homes without putting any money up through the use of adjustable-rate, interest-only loans and 100% loan-to-value mortgages, he said. Cramer summed up the interview saying Heebner has made more money in housing stocks than anybody. "Donald Trump is less of a stock guy than Ken Heebner. I thought that was a worrisome, worrisome call by Mr. Heebner ... and I'm not going to ignore it. ... Be skeptical about the housing stocks," said Cramer.
After-the-Bell ReverberationsCommenting on earnings reports after the close, Cramer said Conexant ( CNXT) reported a "much better number," and Microsoft was "just not that bad." However, he expects selling at the open because "they didn't like KLA-Tencor ( KLAC). They didn't like tech," he said.
Lightning RoundBullish Cramer was bullish on American Express ( AXP), Ameriprise Financial ( AMP), Juniper Networks ( JNPR), Broadcom ( BRCM), Texas Instruments ( TXN), Goldman Sachs ( GS), Sunrise Senior Living ( SRZ), Express Scripts ( ESRX), RF Micro Devices ( RFMD), Agilent Technologies ( A), Amedisys ( AMED), Procter & Gamble ( PG), UnitedHealth Group ( UNH), Teva Pharmaceutical Industries ( TEVA), WG ( WG) and Colgate-Palmolive ( CL). Bearish Cramer was bearish on Sirius Satellite Radio ( SIRI), XM Satellite Radio ( XMSR), Chicago Bridge & Iron ( CBI), Avaya ( AV), Cabela's ( CAB) and Comcast ( CMCSA).
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|