Cramer's Mad Money - Geithner versus Whitney (2/9/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday February 9.

Geithner versus Whitney: Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), Comerica (NYSE:CMA), BB&T Financial (NYSE:BBT), PNC Financial (NYSE:PNC)

Who is Treasury Secretary's real arch nemesis? Some might have guessed Cramer himself, but the real threat to Geithner may be Oppenheimer analyst Meredith Whitney, said Cramer. Geithner is expected to release a plan to rescue financials, but Whitney, ever the bear on banks, will most likely give the plan a few hours' grace period before taking it apart and sending down stocks like Bank of America, Comerica, BB&T and PNC. Why would Meredith Whitney like any such plan when she said last week; “Investors should not even consider owning banks at this point on an equity basis."? Cramer thinks the only banks left standing will be those that don't need government handouts: Goldman Sachs and Morgan Stanley.

CEO Interview: Wall Boston, American Public Education (NASDAQ:APEI)

Cramer put a group of online education stocks on the Sell Block because he felt they were getting too hot. One "keeper" was American Public Education which specializes in providing online degrees to the military. The company offers lower prices than its peers and Cramer notes the military is not cutting funding for the GI Bill. Since the stock is up 13%, Cramer wondered whether American Public Education was still worth buying. Wall Boston thinks the online learning trend is becoming more popular as studies show students learn at least as well or even better online than in a regular classroom. As tuitions skyrocket and the economy declines, more people will be unable to afford the price of a traditional degree and will turn to American Public Education, Boston said. The GI Bill is working in the company's favor and Boston noted benefits are passed onto a soldier's spouse and children. Cramer would continue to buy American Public Education under $40 a share.

Bristol-Myers Squibb (NYSE:BMY) Spins Off Johnson Mead

Cramer has an idea to make some quick money; he would buy Bristol-Myers Squibb baby formula spinoff, Mead Johnson which will trade under the symbol MJN, but he warned investors not to be late to the party. He doesn't think the stock will be worth buying on the open market, but would catch the IPO. Cramer gave the example of Visa's IPO; investors who caught the IPO at $44 are still seeing profits, while those who bought late missed out. Bristol-Myers is only selling 13% of Mead Johnson's equity and will have 98% of the voting power. The small float will mean dramatic moves in the stock price – another reason Cramer thinks Mead's price will jump. Cramer would pay up to $26 for the IPO.

Mad Mail: People's United (NASDAQ:PBCT), Alcoa (NYSE:AA), Marathon (NYSE:MRO), Valero (NYSE:VLO)

To one viewer who made the bullish case for People's United, Cramer responded; “I am recommending no banks. I am recommending no banks because ever since I told people to sell Hudson City Bancorp when it was much higher, I have watched even the best banks go down. I know better than to get in front of a snow plow.” Another viewer asked about an aluminum play on China's stimulus plan. Cramer suggested Alcoa, which at $8 could have $2 to the upside. Cramer told a third viewer that he plans to do a special program with suggestions for new SEC Chairwoman, Mary Schapiro, and reinstating the uptick rule will be at the top of the list. However, Cramer said since Schapiro doesn't like to break with tradition, it might be tough persuading her. When a viewer asked Cramer why gas prices are rises while oil is staying steady, he explained this phenomenon is called a "crack spread," and usually leads to importing more oil. Cramer would buy Marathon and Valero on this trend.

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