Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday January 7.
The Obama drug may be wearing off as many investors are sobering up to the realization that Obama’s proposed stimulus plan might not have immediate, dramatic effects. Johnson &Johnson is a defensive stock that fell 18% on the collective euphoria and the temporary rush out of defensive stocks, and Cramer thinks this old favorite might be rebounding soon. The company’s pipeline is steady, its balance sheet is clean and JNJ has $15 billion in cash. Although two of the company’s drugs are losing patent protection, the pipeline should compensate for that and other businesses, such as consumer products, are strong. The dividend is solid and Cramer recommends buying JNJ, particularly given the opportunity to pick up the stock at a lower price than Warren Buffett did.
Heads will roll or they should, according to Cramer. He called for a “Sea of Indictments” of all those responsible for the financial collapse. He suggested President-Elect Obama’s Attorney General Eric Holder break out the RICO act and investigate misbehavior the financial sector the same way mafia bosses have been put on trial. He also suggested building special prisons for white-collar criminals. “People will not come back to the financial markets until they know the bad guys are put away,” Cramer said.
Cramer’s trading down thesis was good for Family Dollar which jumped 14% on a “monster good” earnings report and beat estimates by 2 cents. However, the thesis was ignored before the earnings report, and there were still many who were pessimistic even as Family Dollar announced it was accepting food stamps and credit cards. Cramer notes how well Family Dollar has done during recessions; it jumped 41% in 2001, so it might be worth holding. CEO Howard Levine says he plans to prepare 100% of the stores nationwide with the capability to take food stamps and credit cards by the end of the year. He mentioned the company’s 50 year success story and added Family Dollar does well both in down times and in better times. Levine says Family Dollar is cashing in on the growth in private label merchandise. Cramer sees upgrades and more great quarters ahead for Family Dollar.
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