General comment: "Soft Landing" and Problem Stocks: Wal-Mart (WMT) and Microsoft (MSFT)
Cramer notes that the beating taken by commodities markets lately and the fact that the economy seems to be headed for a "soft landing" rather than a slide into recession has led many analysts to revise their predicitions that the Federal Reserve is done tightening. "Markets have been reacting in an appropriately bullish manner," he said. "The decline in commodities prices has lead to buying across the board in stocks."
Cramer also discussed the fact that bigger might not necessarily mean better when it comes to providing security in a volatile market. He cited Staples (SPLS) founder Thomas Sternberg's observation that, while Wal-Mart (WMT) is cleaning up in the U.S., it is failing to take hold in Germany and South Korea. "If you can't make it in Germany, you can't make it in Central Europe," Cramer said.
Cramer also discussed the constant delay in Microsoft's (MSFT) new operating system. Cramer owns Microsoft stock, and says "Now it's [at] $22 a share," he said. "Do I want to boot it? No, but it's not going anywhere for a while."
MasterCard (MA), Vonage (VG), and Tribune (TRB)
Cramer notes that MasterCard (MA) opened at $39, and it would have been priced at $45 if the Vonage (VG) IPO debacle had not made underwriters nervous. If the stock had opened at $45, it would have been trading at a multiple of 15 times conservatively estimated future earnings of $3 a share, and "I would be willing to pay $90, if it continues growing," he said. Cramer notes that 24 million merchants worldwide accept the credit card, the company has significant insider trading activity, and he is not concerned about potential legal battles over the company's name.
Cramer warns investors against Tribune (TRB) and Vonage (VG). Although Tribune intends to increase its employment section from 6% to 15%, Monster and Craigslist are more successful. "These newspaper stocks are value traps," he adds. Vonage and other voice-over internet telecom companies have benefitted from not having to pay FCC fees, unlike conventional phone systems. However, the FCC is catching up with them. "I bet the Vonage folks were aware of the FCC change," he said. "These guys just made a major exploitation of the system... I hope I got you out of Vonage. It's not too late."
Bullish calls:
Knight Capital Group (NITE): Cramer calls Knight a "fabulous niche player," and added, "I think it will have the single best results of any firm on Wall Street when it announces earnings ... Buy now at $15."
Sasol (SSL): Cramer notes that this company has really taken a beating since the Fed raised interest rates. This South African company began during the apartheid era when it employed innovative strategies to deal with widespread boycotts. Cramer notes that the stock is down $9 and currently yields 2.45%, Cramer said. "I am shocked it has fallen so far. Buy it."
Abercrombie & Fitch (ANF): Despite solid earnings, this stock has taken a beating. Cramer notes that sales are up 3.3% and that overall revenue was up 17%. Applying his rule of paying twice the growth rate, Cramer said that he'd be a buyer up to 34 times future earnings."I think the stock could double and not be that expensive," he said.
New York Stock Exchange (NYX): Cramer notes that CEO John Thain is going to have to shell out some money to buy an additional stock exchange in Europe, but he is unlikely to exceed the current offer. "Twenty-three of the last 24 private equity deals have been in Europe," he said. "Thain will be able to capture that business when the deal goes through."You want to be there. I like the stock."
Neutral/Bearish calls:
Kroger (KR): Although Cramer calls Kroger "an interesting stock" and has noted its efforts to upgrade, lackluster performance on the international scene is causing Wal-Mart (WMT) to increase expansion domestically, and Cramer is not confident that Kroger can compete.
More: Cramer's latest stock picks, including: Mad Money Recap, Lightening Round, Stop Trading and his Radio Show.
