After four "miserable" weeks, the market took a significant turn when an influential bearish analyst surrendered, Jim Cramer told told viewers of his "Mad Money" TV show Monday. He said that noted analyst Meredith Whitney's upgrade of Goldman Sachs ( GS), a stock which Cramer owns for his charitable trust,
Unraveling the Frontier DealShareholders of Verizon ( VZ) will soon find themselves shareholders of the lesser known Frontier Communications ( FTR) as part of a pending transaction between the two companies. Cramer dissected the deal with Frontier's president, chairman and CEO Maggie Wilderotter. As part of the deal, Frontier will buy 4.8 million rural landlines in 14 states from Verizon, in return for stock and debt. Verizon holders will receive 1 share of Frontier for every 4.2 shares of Verizon they own. Wilderotter said that the deal will triple Frontier's size and make it the largest rural communications provider in the U.S. The company expects over $500 million in cost savings. Wilderotter said the rural market is Frontier's business and the company understands those markets better than anyone. Frontier has a long history of innovation, said Wilderotter, including offering free PCs to customers in return for bundled services. She said the company does a great job providing value to customers and makes more money, with fewer losses, than bigger companies like Verizon. After hearing the particulars of the deal, Cramer said he's a believer in the company, saying he's be a buyer, but only after those Verizon shareholders who are likely to sell their new found Frontier shares have done so.
Rising From BankruptcyCan a company in bankruptcy be worth adding to your portfolio? Cramer said if the company is W.R. Grace ( GRA), then the answer is "yes!" After being tipped by a viewer in last week's Lightning Round, Cramer said he did some homework in W.R. Grace and discovered the company should emerge from its asbestos-induced bankruptcy in the next few months. The new W.R. Grace will have all of its claims settled, will keep its common stock in tact, and will raise additional capital through warrants, not equity. According to Cramer, the story at W.R. Grace is one of improving fundamentals, as the company has strong market share and margins in both its specialty chemicals and industrial products divisions. He said the company does have some housing exposure, but also a large overseas business to take advantage of a weakening dollar. Cramer said there is no urgency to buy shares of W.R. Grace, and all speculative precautions should be taken, including using limit orders and not buying after hours. But as W.R. Grace emerges from bankruptcy this fall, there should only be good news ahead for the company, he said.