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NEW YORK (TheStreet) -- The stocks that previously could do no wrong can now do no right, and vice versa, Jim Cramer told his Mad Money TV show viewers Monday as he listed the groups of stocks that have now become hazardous to your portfolio.
Cramer said that first group of stocks that are toxic to your portfolio is what he calls the "Amazon Army," stocks that follow Amazon.com's (AMZN) lead and sacrifice earnings for growth. Investors used to clamor for these stocks, but with things getting better for the likes of Wal-Mart (WMT) and Target (TGT), why not invest in those names that actually have profits?
The next hazardous group is any sector that has seen a huge number of recent initial public offerings. Cramer said the only reason he can find that Rubicon Project (RUBI) fell today is that there are two competitors waiting in the wings. With so much supply, Cramer said it's a classic case of "dilution by IPO."
The third group investors need to avoid are the early-stage biotechs. For months now money has been flowing out of big pharma and into these little exciting biotechs, but now that big pharma is once again exciting thanks to a wave of mergers and acquisitions, why gamble on the speculative little guys with no earnings?
What's working in the markets? Cramer said with interest rates remaining low, any stock with a good yield is working. That's why Procter & Gamble (PG) and McDonald's (MCD) are among the best performers. They might not have growth, but they offer safety and yield.
What is going on at Bank of America (BAC)? That's what Cramer pondered about this Action Alerts PLUS holding after the bank announced Monday it misstated the value of some its assets to the government. The error will cause a suspension of both the bank's planned dividend increase and its stock buyback program, news that sent shares down over 6% on the day.
Is this news disappointing, embarrassing or just foolish? Cramer wondered. Why would investors ever trust Bank of America again? All good questions, said Cramer, and ones that led him to determine that large banks just can't effectively be run anymore.
Bank of America is not alone, Cramer said, as Citigroup (C) and JPMorgan Chase (JPM), another Action Alerts PLUS holding, have all seem their share of oversights, scandals and omissions. These banks are all not only too big to fail, but too big to manage.
All of these banks are made up of great people, Cramer conceded, but in this environment, with the complexity increasing, no boat is safe, which is why all investors need to take a pass and steer clear.
These banks may seem inexpensive, Cramer concluded, but as Bank of America showed us today, they really aren't.
Executive Decision: Brian Sharples
For his "Executive Decision" segment, Cramer spoke with Brian Sharples, cofounder and CEO of HomeAway (AWAY), the vacation rental marketplace that posted a two-cents-a-share earnings beat when it reported last Thursday on a 28% rise in paid listings. Shares immediately sold off on the news, however, as the momentum stocks have fallen out of favor.
Sharples said that in today's market, stock prices don't seem to correlate to corporate news so he's not overly worried about his stock's recent losses. He said unlike the Internet stocks of the past, HomeAway is making a lot of money and has access to globe markets, which means they will be growing for a long time to come.
Sharples pointed out HomeAway's listing service is appealing to both individual owners and professional property managers alike, as more and more homeowners are opting to rent out their properties for at least part of the year.
Sharples also noted the company's recent acquisition of a new mobile application, one that will not only tell renters all about the house they're staying in, but will also offer local points of interest around the property as well. He said this higher level of personal service is what sets HomeAway apart from everyone else.
Cramer said the turn is not yet at hand for these momentum stocks, but when the turn arrives it will be profitable companies like HomeAway that will be leading the charge.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Tim Collins over the charts of this year's momentum names to see if there are any parallels between the meltdown of 2014 and the dot com collapse of 2000.
Collins looked at a chart of names like Cisco (CSCO), Priceline.com (PCLN), Amazon.com and others to note their explosive growth in 1999, followed by their implosion in 2000 and their long periods of dormancy in the years that followed. His takeaway, once the momentum is gone, its gone for a long, long time.
For today's market, Collins again looked at Amazon, along with newer names like Facebook (FB), and Action Alerts PLUS name, and Yelp (YELP). The similarities were stunning. Collins also noted that recent IPOs like Workday (WDAY), Tableau Software (DATA) and FireEye (FEYE) show the same, a red hot IPO followed by a big run and then a hideous decline.
So what's the key metric to watch? Collins noted that any stock that falls below its 40-week moving average and then sees its 20-week moving average fall below the 40-week, known as a bearish cross, must not be bought.
Collins' analysis showed that Yelp is close to following this pattern, while LinkedIn (LNKD) has already seen the bearish cross. One notable exception was Facebook, whose chart is still holding up well.
Cramer was bearish on Rambus (RMBS).
Executive Decision: David Wenner
In his second "Executive Decision" segment, Cramer sat down with David Wenner, president and CEO of B&G Foods (BGS), the slow and steady food conglomerate with a 4.4% yield.
Wenner said he was not happy with his company's performance during the last quarter. He said sales around the late Easter holiday did come back during the second quarter, but those sales were lost to poor winter weather will never return. B&G is a large supplier to restaurants, Wenner continued, and when they're closed sales are lost.
But despite volume slowdowns primarily in the Northeast, Wenner said there's nothing wrong with brands like Cream of Wheat, which deliver solid, consistent results.
When asked about the company's foray into snack foods, Wenner said much of the growth is coming from the snack category, so he's pleased with the acquisitions.
Wenner said he was also happy with the recent purchase of the Bear Creek brand, calling the niche soup brand a profitable business that should yield $85 million in sales and be instantly accretive.
Cramer said B&G should be a part of everyone's portfolio.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt