Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday January 27.
Cramer inducted Andrew Liveris, “The single worst CEO ever to run a company…into the ground” onto his hallowed Wall of Shame. Here is the saga of how Liveris managed to destroy two-thirds of Dow Chemical’s value in just a year. In January 2008, Liveris had a $9.5 billion deal with Kuwait in his back pocket and vowed the dividend would not be cut and earnings would not go below $2.50 a share. By July 2008, Dow announced a plan to buy Rohm&Hass at a 61% premium of $18.7 billion. By December 8, 2008, 5,000 workers are laid off, but Liveris insisted the dividend was safe and the Rohm & Hass deal with go through. By December 29th 2008, the stock price is at $15, Kuwait backed out of the joint venture, but Dow insisted the Rohm&Hass acquisition and the dividend was still safe. Now the stock is at $13, Rohm&Hass have backed out of the deal and Liveris has finally announced that a dividend cut is “on the table.”
Nucor (NYSE:NUE), Peabody (NYSE:BTU), U.S Steel (NYSE:X), Freeport McMoRan (NYSE:FCX), Research in Motion (RIMM), Verizon (NYSE:VZ)
Pessimism could cause investors to miss out on profitable opportunities. Even hard-hit stocks saw an upside because of low expectations: U.S. Steel gained 7%, Nucor 6%, Peabody 12%, Freeport 12%. Peabody’s gain was particularly surprising, since Obama is not known to be pro-coal. A Wall Street Journal article that claimed Blackberry’ Storm launch was botched brought expectations for Research in Motion down, but when Verizon reported the sale of 1 million Storm units since November 21, Research in Motion’s stock popped 6%. Cramer told investors to be more optimistic, even when the market paints a picture of doom.
While Cramer’s usual thesis is that direct-marketing companies are recession resistant, since as unemployment soars and many are looking for alternative ways of making money, Tupperware’s stock price has fallen. Goings commented “The market is not working for many great companies…It will all settle out.” While some may be worried about Tupperware’s accidental high yield, Goings said his company has always been conservative about its dividend and the yield is safe. Goings added that since half of Tupperware’s revenues are from emerging market countries, he is less worried about the domestic economy. However, in the U.S there are still many new salespeople and he expects more demand for Tupperware products asn consumers stay home and cook rather than eating out.
Even though gold has had a big gain, many technicians are still bullish because of the attractive chart. Cramer, always the fundamentalist, pointed out a flaw in the technicians’ thesis about gold. AEM was staying strong after hitting its 200-day moving average and broke out of its trading range on a high-volume rally. This is the “action” technicians like, and they would buy the stock down to $44. Cramer pointed out his beef with technicals; they do not teach investors when to get out of a stock. An 86% gain is just too large to buy, even for a best-of-breed stock. With deflation rather than inflation plaguing the economy, gold may not be the right address. He would sell Agnico-Eagle Mines to take profits and may perhaps consider buying it below $44.
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