Is the press trying to keep you from making money? "It sure feels that way," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.
Grading the TechsCramer revisited three recent speculative stocks in the tech sector -- AMD ( AMD - Get Report), Sprint ( S - Get Report) and Motorola ( MOT -- to see which of these under $10 stocks is still worth holding onto. Cramer said to evaluate these three names, he used a 10 point scale, looking at three criteria: 1. industry position, 2. strength of the company's business and 3. comparative stock performance. When looking at industry position, Cramer said Motorola was in the worst shape, struggling to compete with the likes of Apple ( AAPL and Research In Motion ( RIMM. He awarded Motorola one point. Sprint, he said, was in better shape, doing well in the prepaid phone market and generating buzz with the new "Pre" set to debut from Palm ( PALM. Two points for Sprint. For AMD, Cramer awarded four points, as the company is taking share from both Intel ( INTC and Nvidia ( NVDA. In the business quality category, Cramer gave AMD three points for the solid demand for its chips. He also gave Sprint three points for its cost cutting measures and possible takeover prospects. Motorola was only given one point, as the company continues to struggle and lose money. Finally in the stock performance category, Cramer said Motorola received two points for its 41% year-to-date rise in its stock price. AMD also received two points for its 103% rise. Meanwhile Sprint, with its 200% move this year, only gets one point for its limited upside. Cramer said in his final analysis, Motorola, with only four points, is a sell. Sprint, he said, is a buy, but only on weakness, as its six points include a big run in the stock price. But the real winner, said Cramer, is AMD, with nine points and lots of room to run.
Off the ChartsIn this segment, Cramer again squared off against colleague Dan Fitzpatrick, this time over the chart of engine-maker Cummins ( CMI, to see whether the technicals, or the fundamentals, are driving the stock's performance. According to Fitzpatrick, Cummins is in a sweet spot, having recent broke above its 50-day moving average. Recent patterns indicate investors are buying in on any weakness and selling into any strength, causing the once resistance line to now become a support line for the stock. Fitzpatrick now says Cummins looks poised to do the same with the 200-day moving average, and break out and power higher. Cramer disagreed, saying he thinks Cummins is only a winner if the dollar stays weak. Without a global recovery, he said, Cummins is a risky move. He said that analysts are assuming the worst, and a global recovery is indeed not baked into the numbers, but if the dollar were to move higher, it would stop Cummins cold. On the flipside, Cramer said if a recovery does occur, he'd rather be in a stock like Caterpillar ( CAT, a stock which Cramer owns for his charitable trust,
Rating Cramer's PicksCramer offered some praise to the professors at Northwestern University, whose upcoming study in the "Financial Services Review" journal states that Cramer's stock picks are indeed better than the markets overall. In the study, which looked at Cramer's stock picks from July, 2005 through December, 2007, Cramer's return was 12.09% on an annualized basis, compared to a 7.35% return in the S&P500 and a 9.5% return in the Russell 2000. Cramer said he's not a fan of any study that tries to measure his performance, since it's impossible to measure qualitative comments like "waiting for a pullback," or "buy after a company reports earnings." Yet he called this study "better than most" in their attempts to characterize his results. Cramer reminded viewers that "Mad Money" is designed to make viewers better self-guided investors, and not to make a quick buck in the markets. "I'm not just recommending stock," he said, "I'm trying to teach you."