Recap of Jim Cramer's radio show on Wednesday May 31. Click on a stock ticker for more analysis:
Today's market began to recover a bit after Tuesday's steep decline. Cramer credits technical analysis for the bounce. Although Cramer does not use technical analysis to determine his stock picks, he does believe there is some value in noting patterns of rises and declines. Since the dip was similiar to the S&P decline a week ago, investors felt safe about investing again, and the market benefitted. However, Cramer warned against going overboard during these technical rallies, and to sell a little into strength. "I really and truly think that, when we have any snapback rally, you have to unload," he said. Cramer likes markets that go up on fundamentals, and is using this small gain to skim a bit off of his own portfolio.
Oil is Well
As crude prices are coming in, Cramer suggests buying an oil stock now. He cites many reasons to expect crude oil to rise: the ongoing conflict with Iran, Venezuela's move to get Occidental Petroleum (NYSE:OXY) out of Ecuador, Rebels in Nigeria who are cutting off oil transports, sluggish production in Iraq, and the low output of alternative fuels. Cramer predicts that in the next couple of years oil will hit $100, and that those without oil stock will be kicking themselves.
Bad Moves: Tribune (TRB) and Vonage (NYSE:VG)
Cramer told two stories -"one bad, and the other, worse"- about Tribune (TRB) and Vonage (VG). First, he criticizes Tribune's move of going into debt to buy back its own stock. He added that the company's fundamentals are "frankly awful," and that there seemed little opportunity for growth. He suggested using any strength as a chance to sell. About Vonage, Cramer comments, "this is the first time I've ever seen an IPO botched this badly." The company lost more than 20% in the first four days of trading. He is critical of their policy of giving shareholders who use their product preferential treatment.
Nabors (NYSE:NBR): Although the company has gone into debt to buy back stock, and the stock hasn't done well since this move, Cramer notes that NBR is committed to its shareholders and that it is the number one driller for hard-to-reach places. He says not to give up on NBR.
Qualcomm (NASDAQ:QCOM): Cramer recommends this wireless play, which has spread to Europe and Asia and may hit China.
Manitowoc (NYSE:MTW): Although this company has good fundamentals, investors pay more attention to Terex (NYSE:TEX), Caterpillar (NYSE:CAT), and Deere (NYSE:DE). "Perhaps tomorrow is Manitowoc's day," Cramer says.
Sony (NYSE:SNE): Sony has increased personal computing capabilities with its game console. Cramer expects Sony to rise when the Japanese market bounces back.
Sirius Satellite Radio (NASDAQ:SIRI): SIRI is run by Mel Karmazin, who is "money in the bank," according to Cramer. With the stock around $4, Cramer is bullish but would ring the register at $5 or $6.
Walgreen (WAG): WAG is a "best of breed" stock which is hovering at a 52-week low, is growing at 15%, and sells at 23 times earnings.
China Mobile (NYSE:CHL): With a few exceptions, Cramer usually doesn't recommend Chinese stock, because he doesn't trust the numbers. Even though CHL is listed in Hong Kong, he is wary.
Cummins (NYSE:CMI): Cramer says that Cummins is the "biggest and best [diesel engine manufacturer] in the world," and that the small dip in this stock is due to upcoming environmental regulations. Until 2007, it will be legal to buy a certain kind of engine which will not be available in the future, and it seems that many truckers are getting their orders in early, stealing demand from 2007 orders. Cramer suggests letting a little go, looking for good upcoming quarters in 2006, and expecting the stock to get hammered in 2007.
Martha Stewart (NYSE:MSO): Cramer doesn't recommend magazine stock in general, and suggests taking advantage of MSO's gain to ring the register.
XM Satellite Radio (XMSR): This company fell far short of its quarterly estimates and was beaten out by Sirius Satellite Radio (SIRI).
Ciena (NASDAQ:CIEN): This stock is behaving better than its sector. Cramer suggest selling half of the stock on strength and to wait make the next move after the earnings report on Thursday.
Oregon Steel (OS): Cramer would let some of this stock go, which is buoyed up by the bounce, although he likes the fact that OS supplies steel to pipelines and rail.
More: Cramer's latest stock picks, including: Mad Money Recap, Lightening Round, Stop Trading and his Radio Show.