The phone and cable companies are fighting a war to see who will be the largest broadband provider, Jim Cramer told his "RealMoney" radio show listeners Thursday. Conventional wisdom dictates that in a situation like this, both sides lose. When companies go head-to-head, they tend to spark price wars and reduce their opportunities to rake in big profits because competition is too fierce. But both sides seem to be winning in this case, he said. Comcast ( CMCSA) "finally got its act together on the cable end," and phone companies AT&T ( T) and Verizon ( VZ) are doing well, too. This story could produce other winners, too. Cramer said that as the companies see their earnings grow, they will start spending again on technology, and this will help battered tech names like Conexant ( CNXT), JDSU ( JDSU) and Tellabs ( TLAB). The stocks have fallen, and it may be too late to dump them now, he said. But he believes that they'll start getting orders six months from now. Action Alerts PLUS , also surprised to the upside because its Kraft ( KFT) division outperformed. He said that everything in the oil patch is working and that you could pick whatever you want. He likes ConocoPhillips ( COP) and Schlumberger ( SLB).
Safeway ( SWY) was the winner among the supermarkets, he said.
Winning Season
There have been a lot of winners this earnings season, Cramer said, pointing first to Merck ( MRK), which beat the numbers by a mile. Altria ( MO), which he owns for his charitable trust
Rally Caps
"Today's market is brought to you by the number four," Cramer said, noting that with the market up for the fourth straight session, this is the best rally we've seen since May 11. (The S&P 500 and Nasdaq both subsequently fell into negative territory in recent trading.) Even with turmoil in the Middle East, rising gas prices, a weak quarter from UPS ( UPS), the downgrade of FedEx ( FDX) and Dow Chemical ( DOW) being down 10%, the upswing continues. But Cramer said it's time to throw some rain on the parade because when the market is going higher, it's time to lock in profits. Don't get complacent, he said, reiterating that he likes to buy low and sell high. He said that weakness in consumer stocks combined with a spike in utilities and insurance companies points to a "severe slowdown that could take people by surprise." Weakness at Black & Decker ( BDK) points to trouble in consumer stocks, he said, adding that he would be worried about other retailers like Federated ( FD), J.C. Penney ( JCP) and Kohl's ( KSS). Even though he bought Sears ( SHLD) for his charitable trust Action Alerts PLUS , he added that it might not be spared, either. But Cramer said that he still likes First Data ( FDC), even though the stock is down. He was originally bullish on the stock because the company had plans to spin off its Western Union division. But during its conference call, the company said that Western Union use is waning as President Bush and the public focus on immigration. This has hurt business at Western Union, which many Americans use to send money overseas, but the issue of immigration and illegal immigration will drop from the headlines, Cramer said. This could be a buying opportunity -- a six-month buying opportunity, he said. Consolidated Edison ( ED) is a good play in a slowing economy because utilities companies can pass through any raw cost increases onto the consumer, Cramer said. Rackable Systems ( RACK) is a decent company, but its multiple is too high to make it a buy, Cramer said. He wouldn't touch it before it reports its quarterly earnings. He also said that he would buy more Hudson City Bancorp ( HCBK). Cramer said he was shocked when UPS ( UPS) missed the numbers as badly as it did, and that if he had to own a company in that sector he would choose FedEx ( FDX) because it's a better-run company. He also said that he would rather buy Colgate ( CL) or Procter & Gamble ( PG) over Dow Chemical ( DOW). Coke ( KO) is now one of Cramer's "anointed" stocks, and he said it should have its first big run in five years. Management is very good, he said, and he believes it will inch its way up from $44 to $50. Finally, while AstraZeneca's ( AZN) stock is lower, Cramer said the fall is a case of people ringing the register and that it's a good opportunity to buy.