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Cramer: Selling Bank of America Should Not Be an Easy Option

Posted at 6:03 a.m. EDT on Friday, Jan. 13, 2017

Binary has to stop. It is too Pre-Trump in thinking. It is a loser's game.

I'm talking about the ridiculous notion that the banks are either today's stars or today's goats and there is nothing in between.

It is true that if I were running a hedge fund I would be thinking, "hmm can I short Bank of America (BAC - Get Report) at $23 and buy it back at $21.5?" Why not short a stock like KeyCorp (KEY - Get Report) or First Horizon (FHN - Get Report) ? They are up way too big vs. the fundamentals. I don't know if the CEOs would even disagree about the speed of the moves up, even as it is a very rare CEO who calls his or her company overvalued.

What I am talking about is that for the rest of 2017 all we are going to hear about is if the Fed is going to hike three or four times. I do not have a lot of companies I follow for which I know I can raise estimates without much thought.

The banks are the ones that fit that pattern.

Let's say that Bank of America "disappoints." The question is how we value B of A. For years and years, it was valued by what its net interest margin was. When it was clear that the Fed was "never" going to raise rates, we switched our prism to book value, betting that these scrubbed-clean companies wouldn't trade too much below book value.

But then they did anyway, with Bank of America and Action Alerts PLUS charity portfolio name Citigroup (C - Get Report) --$64!!--being the most ridiculous outliers.

Now that whole thinking is off the table. If we are going to judge a bank by NIM, then we need to recognize that whatever number is reported by, say, Bank of America, it won't be as good as we will have if the Fed keeps raising rates.

Which brings me to the point of the session. If you decide today that Bank of America has missed the numbers and you want to sell, it's not that simple.

Maybe it will miss this quarter. But if the Fed raises rates next time it can and Trump is able to force the regulators to go back to the old days when banks have more autonomy over capital, you might end up dumping a high-yielding stock that sells at 10x earnings.

To me, that means, wait a second, stop viewing any of these banks the way you did before Trump. Instead, think of them as potential growth and income stocks. If that's what you do, would you really sell on a couple of pennies miss?

That's the old days.

Embrace the new.

It is far more lucrative.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long C.


Cramer: Small Business Survey Makes Big Waves

Posted at 3:28 p.m. EDT on Tuesday, Jan. 10, 2017

Look at the ripples from that small business survey!

Home Depot (HD - Get Report) , which has been stalled here, is finally putting up some points. I've been waiting for this one to advance.

Domino's (DPZ - Get Report) , which is a quintessential small business outfit, is having a positive day.

Shares of American Express (AXP - Get Report) , which has managed to position itself as a small business abettor, are working and I think they have much further to go.

You might want to think about Action Alerts PLUS holding Costco (COST - Get Report) as a company that can benefit from small business expansion. It has in the past.

I like Wix.com (WIX - Get Report) , too, as a company that helps small businesses develop websites. They thrive on business formation.

There are others that should be working but aren't: Square (SQ - Get Report) and Intuit (INTU - Get Report) . Both benefit when small business grows. I like both stocks.

Finally, there is Paychex (PAYX - Get Report) which has been a roaring stock but is taking a breather. It is the small-to-medium size payroll processor and it makes a ton of sense to buy here.

Not saying that all of these should just erupt here. I am saying that the survey's results present a decent backdrop for all of these stocks to trade higher.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long COST.