Cramer's Mad Money - Bond Bears, Trader Bulls (12/9/08)

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Includes: AVGO, BUCY, CAT, CLS, DIS, F, FCX, GM, KMB, MCD, MO, NSM, NUE, TNH, TXN
by: Miriam Metzinger

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday, December 9.

National Semiconductor (NSM), Broadcom (BRCM), Texas Instruments (NYSE:TXN), Colgate-Palmolive, Clorox (NYSE:CLX), Kimberly-Clark (NYSE:KMB), Caterpillar (NYSE:CAT), Nucor (NYSE:NUE)

Those who invest in bonds and traders who buy stocks are on completely different sides of the fence when it comes to the economy. Traders have been buying up oil, agriculture and technology names such as National Semiconductor, Broadcom and Texas Instruments, but Cramer thinks defensive names Colgate-Palmolive, Clorox and Kimberly Clark are more prudent and were down on Tuesday. Cramer says he sides with bond-holders and would sell accidental high-yielders Caterpillar and Nucor, which have already made their moves, and buy them back lower. In the meantime, Cramer recommends defensive plays or just playing for time.

CEO Interview: Timothy Sullivan, Bucyrus International (NASDAQ:BUCY) with Freeport McMoRan (NYSE:FCX)

While Bucyrus’ stock has been a “cliff jumper”- down to $17 from $73, Tim Sullivan was confident about the company’s outlook which he expect to be steady because customers are not so quick to cut back on mining equipment. When Cramer asked Sullivan about an order cancellation from Freeport, Sullivan insisted that cancellations are rare and many orders cannot be cancelled. Also, Bucyrus’ backlog is sufficient to make up for the loss of Freeport’s contract. Sullivan said he is not worried about President-Elect Obama’s comments on global warming because coal is used by 77% of nations, and China builds a new coal power plant weekly to keep up with its energy demand.

Auto Bailout Buys: General Motors (NYSE:GM), Ford (NYSE:F), General Motor Preferred (NYSE:GPM)

Cramer wouldn’t risk buying GM and Ford common stock as long as a turnaround for the Big 3 is still speculation, even with a bailout. He recommended preferred stock that will pay out a nice dividend no matter what happens. General Motors’ preferred is a 6.25% coupon 2033 convertible. It trades at $4.50 a share and yields more than 34%, and those who hold by the end of December 26 will get a dividend on January 15. The semiannual payment is 17%. The ticker for Ford Capital Trust II depends on the database you are using, and costs $9.30 a share, with a 81.25 payout per share per quarter or 35% annually. The preferred will do well whether the autos thrive or fall.

Mad Mail: Terra Nitrogen (NYSE:TNH), McDonald’s (NYSE:MCD), Caterpillar (CAT), Altria (NYSE:MO), Disney (NYSE:DIS)

Cramer doubts commodities will be up again and would sell agriculture plays, but he added that he does like Terra Nitrogen for its dividend. Cramer told another viewer he likes Caterpillar below $39, McDonalds at $55 and Altria at $15.

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