Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Thursday January 15.
Citigroup (C), Bank of America (BAC), Apple (AAPL), AT&T (T), Verizon (VZ) Home Depot (HD), Caterpillar (CAT), Research in Motion (RIMM)
The mood of the markets can’t get more negative; TARP reforms are sending financials like Citigroup and Bank America into a tailspin, and no one really knows what is going to become of Apple during CEO Steve Jobs’ leave of absence. Even though rallies in the persistently bearish market are temporary, Cramer says they are still tradable. Verizon and AT&T tend to bounce back during selloffs and have “fabulous” risk reward opportunities, Cramer said. He also recommended Home Depot, Caterpillar and Research in Motion ahead of the next rally.
A caller on Lightning Round stumped Cramer a few days ago when he asked about DelMonte. Cramer did some research, but the proof of the pudding…err..dog biscuit..is in the tasting; he ate a milkbone biscuit to prove how good DelMonte’s foods are during a recession. Cramer says DelMonte is well-diversified, with 55% of sales from people food and 45% of sales from pet food, and only one analyst has listed DelMonte as a buy. Since 67% of American homes have pets which have to be fed even in a bad economy, the company should continue to do well in a downturn and its human food are good trade downs. The company also has strong insider buying, raised guidance from 58 cents a share to 62 cents and trades at 11 times earnings, which is low. Cramer predicts DelMonte could go to $9.
Fundamentals vs. Technicals: iShares Nasdaq Biotechnology ETF (IBB), Celgene (CELG)
Cramer continued his series exploring the differences between technical and fundamental analysis. According to the chart, IBB has broken its trendline and is headed south, but Cramer still says that biotech is the best sector for a recession. However, he does concede that there might be problems buying indexes, which rise and fall on the outlooks of individual stocks, and he prefers Celgene, four points off its low and trading at a mere 0.6 times earnings with a growth rate of 30%. “Celgene’s never been this cheap,” Cramer said.
CEO Interview: Bob Simpson, XTO Energy (XTO)
Simpson discussed how falling natural gas prices have affected his company. The fall was caused by an increase in supply and falling demand, but steps like reducing rig counts by 25% are being taken to stabilize natural gas prices. Simpson says XTO has an improved balance sheet and has been repaying its debt. While Simpson has sold stock in the company, he insists this was to diversify his portfolio and is not indicative of the stock’s performance. Cramer said he will not recommend XTO right now, but when natural gas recovers, he will like XTO and Anadarko Petroleum
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