When you hear there is more money coming to the Southeast to repair hurricane damage, it means money for Shaw Group ( SGR), Jim Cramer told
"RealMoney" radio show listeners on Wednesday. The start of the 2006 hurricane season is only three months away, and more money is being asked for in order to repair bridges, to strengthen levees and rebuild what needs rebuilding in the region, Cramer said. The reason he believes Shaw Group will get these contracts is because it's based in Baton Rouge, La. He also said the stock has been sinking like a stone because people believed there was no more rebuilding money going to Katrina-related repairs, creating a buying opportunity in a company that could move higher as it wins these new contracts.
It had all the appearances of a pyramid scheme," he said. The warning signs to look for, a la Enron, include taking down too much debt. Enron borrowed more than they had, he said. Silencing critics is another sign, which he said Enron did to him. "If you have conviction about your business ... who cares what the Cramers say," he said. Insiders unloading is another clue, he said, as is an earnings report that is impossible to understand. Every quarter looked like a blowout quarter at Enron, but the company couldn't -- and wouldn't -- say how it was making money. Cramer said that Take-Two Interactive ( TTWO) fits that pattern. One of the company's executives recently quit and sent a note to the board that said the company has no idea what it's doing, he said, showing that there is panic among executives on top of its big financial losses. And best of all, the stock is up $1.50, so investors are "in great shape to ring the register" and get out before real cracks show up in the story.
Action Alerts PLUS, believes that Symbol is one of the worst-run companies in the world.
There will be a bar code on every ship and government money will flow in, but "some companies can't execute and Symbol is one of them," he said.
"Instead of buying Google, pick up some Yahoo! ( YHOO)," he said, noting that he owns Yahoo! for his charitable trust. "Google is up 170 points from its 52-week low ... Yahoo! is sitting at its 52-week low." As for stocks he needs us out of, he said it's time to ring the register on True Religion Apparel ( TRLG). The company only makes denim under its brand, True Religion, but he has heard from his sources that jeans are out and a more formal apparel look is in. The stock has doubled and it's time to go, Cramer said.