Recap of Jim Cramer's radio show on Tuesday, May 16 Click on a stock ticker for more analysis:
General comment: "Buy Weakness, Sell Strength"
Cramer pointed out that last week's dive in commodities such as zinc, copper, steel, gold, aluminum and mining, which had previously been rising because of demand from developing countries, did not have so great an impact on those who were "scaling out", or buying low and selling out the position in pieces. Those who bought commodities when they were high began to panic as soon as they declined. Cramer recommends benefitting from such "panics" by buying stocks after a rapid decline, when they are cheap and are poised to bounce back. However, he recommends "buying in increments" because of uncertainty over whether or not the stock has bottomed out.
Beware of Stockpiling
Cramer cautions that businesses usually cool off when there is a lot of inventory. However, the exception to this rule is oil, because the stockpiling of oil is due to global instability, and not a surplus. Current markets that have inventory gluts include: housing, natural gas, and semiconductors.
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*Commerce Bancorp (CBH) and Countrywide Financial (CFC): Since the Federal reserve will stop raising interest rates, given the decline in commodoties, financials will stop declining as well. CFC is included in Cramer's own portfolio.
*Coldwater Creek (NASDAQ:CWTR): "is a best-of-breed company" and has room to grow.
*Whole Foods (WFMI): Although WFMI enjoyed an excellent quarter, the stock has declined somewhat, and is a good buy.
*Starbucks (NASDAQ:SBUX): In spite of an incredible showing this quarter, SBUX pulled back by 10%.
*News Corp. (NASDAQ:NWS):Newscorp owns Myspace, a site geared toward younger people, which has 30 million users and has a good chance of attracting advertisers or a buyer.
*Bank of America (NYSE:BAC) and Citigroup (NYSE:C):Cramer told his listeners not to be overly concerned with the huge macroeconomic numbers that are appearing, or with the consumer price index report that is coming out. BAC experienced a large buyback, offers 4% dividend, and is worth buying in increments. The second portion should be purchased according to the inflation measure and if the price declines.
*Cameco (NYSE:CCJ):: CCJ one of the few sources of uranium, and Cramer predicts that nuclear energy will become more popular.
*ConocoPhillips (NYSE:COP): Cramer says this is a "right here, right now" buy since it is the cheapest oil company, and sells at just six times earnings.
*Sasol (NYSE:SSL): This stock has declined 15% and has alot of potential, since it has perfected technology that turns coal into oil.
*Rentech (NYSEMKT:RTK):: Is a good buy at $4.50
*Walgreen (WAG):Cramer calls Walgreens a "quintessential slowdown stock", since it stays sturdy regardless of the economy
*Biogen Idec (NASDAQ:BIIB): like Elan (NYSE:ELN), this company sells the popular drug, Tysabri, but Biogen has the advantage of having other drugs that are potential sellers, whereas Elan specializes in Tysabri.
*WW Grainger (NYSE:GWW): Cramer is bullish on this company, which makes business products, despite the fact that it is up 39% from last year, because he believes that it has an amazing potential to grow.
*Ebay (NASDAQ:EBAY): This company is reducing its fees to attract customers, but Cramer sees it as a sign of desperation. He also notes that the company has limited strategies for raising revenues. Cramer suggests holding off on buying this stock until it goes down further.
*Electronic Arts (ERTS), JDSU (JDSU) and Bookham (BKHM): These companies had a solid performance, but will probably not increase due to slow growth and too much inventory.