Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Tuesday January 13.
Cheapest Cell: Nokia (NYSE:NOK), Research in Motion (RIMM) and Motorola (MOT)
The stock with the lowest price may not be necessarily the cheapest. Motorola trades at a mere $4, down 70% while Research in Motion has dropped 50% and Nokia is down $60. RIMM trades at just 12 times earnings with a 25% growth rate, Nokia at 15 times earnings with a 20% growth rate, and Motorola trades at 72 times earnings with a growth rate that is not so certain. RIMM seems to be the winner, and in reality, the cheapest with its broad range of products that are taking market share. Cramer thinks Nokia’s “trade down” strategy will not work, and he would buy RIMM, hold Nokia and sell Motorola.
Last week’s darling stocks are now in the doghouse and high expectations are to blame. “Why are people so astonished by bad numbers?” asked Cramer. The confidence at the end of 2008 was a bit overblown and Cramer says now stocks are at more reasonable levels. Tencor’s earnings underperformance, the departure of some of Seagate’s executives and cancelled orders for Transocean should not have surprised anyone. Alcoa’s miss was also expected, since it is a poorly run company. As always, Cramer suggests buying low among “damaged stocks not damaged companies” and look at the dividend. He recommended Caterpillar under $40, NYSE with a 4.9% yield, and Home Depot with a 4% yield.
ConcoPhilips is stabilizing after a major selloff in October, when it fell from $65 to $45. Now that COP is trading sideways and doesn’t seem to be going lower, it is a buy according to the technical point of view. Cramer, who is a fundamentalist (not in the tradition of Jerry Falwell, he reminds viewers) points out the third largest integrated oil is trading at a 30% discount to its competitors, and has a long tradition of buybacks and increasing the dividend. With oil production increasing and low prices, ConcoPhillips will see improved margins. COP trades at a mere 7.1 times earnings and is expected to have a 9.2 multiple. In the case of COP, the technical and the fundamental analysis almost agree; a technician would say “buy now” and a fundamentalist would say “buy Friday.”
Cramer vented once again about UltraShort ETFs and says he is amazed the government would allow such funds to exist since they can mislead even the most seasoned investor. “They generate losses even in the worst stocks in the market,” said Cramer. “These funds must be stopped.”
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