Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV show, Friday January 23.
Four Signs of an Upcoming Rally: Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Research in Motion (RIMM), Nokia (NYSE:NOK), Sony (NYSE:SNY), Exxon Mobil (NYSE:XOM), Pfizer (NYSE:PFE), Wyeth (WYE), Bristol-Myers Squibb (NYSE:BMY), Novartis (NYSE:NVS), AstraZeneca (NYSE:AZN), Eli Lilly (NYSE:LLY), Forest Labs (NYSE:FRX), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS)
Cramer thinks there is going to be a big rebound rally. Here’s why:
- Tech is back. With Apple’s awesome performance, Google’s better-than-expected quarter and Research in Motion’s strong sales, the tech sector is showing signs of health. While Microsoft is not holding up, companies that make cool, trendy products are the ones to watch and are leaving “uncool” names like Nokia and Sony in the dust.
- Oil is stronger. While Exxon was down on Friday, Cramer thinks Exxon (which comprises 5% of the S&P, more than the financials combined) could work its way up and spark a rally. Oil prices need to remain solid for a couple of days to create an upturn.
- The Pfizer-Wyeth Merger. This $60 billion deal could lead to more M&A activity as investors make trades based on takeover speculation. In the coming week, Pfizer, Wyeth, Bristol-Myers, Novartis, AstraZeneca and Eli Lilly report earnings, but Cramer would take a look at Forest Labs, which will need acquisitions to continue its strong growth.
- Goldman Sachs and Morgan Stanley are coming back. Neither one of these financial giants has exposure to mortgages or consumer credit. As Goldman rises, it may have to do another equity offering to repay TARP fund. Cramer thinks Goldman will keep looking better and better.
Of all the above-mentioned stocks, Cramer thinks Apple, Google, Goldman Sachs, Forest Labs and Research in Motion are the ones to buy.
Speculation Friday: Abbott Labs (NYSE:ABT), Pfizer (PFE), Wyeth (WYE), Celera (NASDAQ:CRA), Sequenom (NASDAQ:SQNM), Martek Biosciences (MATK)
Big Pharma is a bit worried about the present administration, since Democrats aren’t seen as being the best friends of major drug companies. More M&A activity is expected from the sector, according to Cramer, as a way of battling the generics. Pfizer is buying Wyeth, and CEO Miles White of Abbott Laboratories says he was a willing buyer if there was a willing seller. That willing seller might just be Celera, which produces cardiovascular lab diagnostics and has paired up with Abbott to make molecular diagnostic products. Celera’s current joint venture with Abbott and its KIF6 genetic test are sufficient reasons to buy the stock. Celera’s acquisitions Berkeley Heartlabs and Atria Genetics brought sales up 123% in the last quarter, and with the company’s potential to grow earnings per share by 50%, the multiple of 41 times forward earnings may seem worth the risk. Emphasizing the fact that Celera is a speculative stock, Cramer advised viewers to wait five days before buying, to invest in increments and to use limit orders. Cramer mentioned two other potential takeovers for Abbott: Sequenom and Martek Biosciences.
Cramer’s Outrage: John Thain and Tim Geithner with stocks Merrill Lynch (MER) and Bank of America (NYSE:BAC)
While Cramer says he would be sharing a cell with TYCO CEO Dennis Kozlowski if he tried to get away with “financial murder,” Former Merrill Lynch CEO John Thain and the next Treasury Secretary Tim Geithner will be walking free. “Being hounded by the press until the next top story just doesn’t cut it,” fumed Cramer, although given the influence these two men have, they will not only get away with it, but John Thain might get the Congressional medal of honor for office decoration (alluding to $1.2 million he spent decorating his office) and Tim Geithner will probably be given a tax refund and an apology from the government, remarked Cramer. In the case of Thain, it’s personal; Cramer blames Thain’s influence in his faulty New York Stock Exchange call and he says Thain also pantsed Bank of America. No one is asking where Geithner stands on the important issues, and the public is “too afraid or too in love with him” to ask why he allowed Lehman Brothers to collapse, probably the worst decision the government has made in the entire crisis. “But Thain walks off with billions and Geithner goes to Washington…what a wonderful life,” said Cramer.
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