Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Thursday, October 16.
Broken Stocks Not Broken Companies - Kimberly Clark (KMB)
In the daily struggle to figure out what's driving the market, Jim Cramer told viewers of that the fundamentals of the world economy and hedge fund industry are the two forces pushing stocks down. While the global economic situation is unfolding, Cramer focused on the hedge fund industry as an opportunity in the making. He said hedge-fund selling is occurring at a record pace, with $43 billion in redemptions alone in September. With that gigantic amount of selling pressure, Cramer said the market is littered with broken stocks, but not necessarily broken companies. Cramer noted consumer products maker Kimberly Clark as an example of a broken stock that deserves to be higher. The company's products are not economically sensitive, but since the company is part of the S&P500, its stock price has plummeted, pushing its dividend yield to very attractive levels. With Kimberly's stock higher today on an upgrade from Goldman Sachs, Cramer recommended waiting on a pullback before pulling the trigger. "Never pay the market price, let the stock come to you," he told viewers. He recommended buying incrementally on weakness and taking advantage of the dividend yield while the market is determining its bottom.
The Pickens Plan - Clean Energy (CLNE)
In a special interview, Cramer welcomed legendary oil and gas tycoon Boone Pickens to the show to discuss his campaign promoting energy independence for America. Pickens said he doesn't understand why his plan, which calls for a $1.2 trillion investment to convert 20% of the country's energy supply to wind power and the use of natural gas as a bridge fuel, is not gaining more traction with the presidential candidates. "They just don't get it in Washington," he said. Pickens said that the American people, however, do support the plan. He pointed his Website, pickensplan.com, has attracted more than 10 million visitors and has a mailing list of 1.25 million people. Asked if lower oil prices make implementing the plan harder, Pickens said that lower oil prices don't change the fact that 65% to 70% of America's energy comes from overseas. He called the huge level of dependence on foreign oil a "real security issue" for the country. He reminded viewers that for every gallon of domestic natural gas they use, the country imports one gallon less of foreign oil. Pickens said he still supports Clean Energy, a provider and operator of natural gas fueling stations and a big proponent of wind power as a clean, renewable and domestic energy source.
A Life Sentence - American International Group (AIG)
Cramer sentenced American International Group to a life sentence without parole on the Sell Block. He said Oct. 21 will be a day of reckoning for the once great insurance company. On that date, Cramer noted that the companies who wrote insurance policies against the debt of the now defunct Lehman Brothers, will be forced to pay up. He said that thanks to failed regulation by the Securities and Exchange Commission, the $158 billion worth of Lehman debt was allowed to be insured for $365 billion. This was all part of the short-sellers grand – and legal – plan to bring down Lehman, Cramer said. Cramer said he believes that AIG, which was given a gracious bailout by the federal government. That means the U.S government, which now owns most of AIG, will most likely spend next Tuesday cutting checks to the hedge funds involved. Cramer thinks this payout will erase whatever value might be left in AIG’s common stock. So the company’s going in the Sell Block. He said it's outrageous that the company's management could have allowed it to take on such an incredible amount of debt. Cramer took further issue with the company's management and board of directors who, despite the recently approved federal bailout, still allowed $440,000 worth of corporate retreats, golden parachutes and millions of dollars in bonuses for its executives.
Wal-mart, a stock which Cramer owns for his charitable trust, is the only retailer he likes in this market. Even up $4, I’d buy it aggressively. I think that company’s going to blow away the numbers. I recommended Tootsie Roll not that long ago…Hershey had a quarter that was in line. The stock was up. I am still a buyer of Tootsie Roll.
Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round and Stop Trading!
Get Cramer's Picks by e-mail -- it's free and takes only a few seconds to sign up.
Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com