Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday February 19.
Cramer once again criticized Treasury Secretary Tim Geithner, who is still haunted by the specter of the collapse of Lehman Brothers. The demise of the once-great bank has changed financials, perhaps permanently, and the sector continues to decline. While Tim Geithner claimed he lacked the legal authority to save Lehman, Cramer proves this claim false; the Primary Dealer Credit Facility which Geithner created to save Bear Stearns gave him the authority to rescue Lehman, but he chose to be complacent. Instead he chose to bail out AIG the day after Lehman died.
Wall Street Survivor: Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), Visa (NYSE:V), Mastercard (NYSE:MA), CBS (NYSE:CBS), Wal-Mart (NYSE:WMT), Amazon (NASDAQ:AMZN), Costco (NASDAQ:COST), Wynn Resorts (NASDAQ:WYNN), Agnico Eagle Mines (NYSE:AEM)
Cramer compared action on The Street to the television show Survivor and discussed which stocks would prevail and which would sink. No financial is trading like a survivor apart from Goldman Sachs, Master Card, Visa and Morgan Stanley. In media, CBS, television and newspapers are suffering. Everyone knows housing and autos are on the skids. There are bright spots in retail, and not just Wal-Mart. Costco could be good and Cramer thinks Amazon might be a buy if its price drops. Wynn resorts stands alone in the gaming industry as a decent stock. Healthcare and technology sectors might be alright. In the gold space, Cramer’s pick is Agnico Eagle Mines.
Off the Charts: Qualcomm (NASDAQ:QCOM)
Cramer gave Qualcomm the technical and the fundamental treatment on Thursday. Looking at the chart, Qualcomm seems to be a sell since it hasn’t risen above its January highs. This indicates the stock is not attracting new buyers. When it did fall off of its highs, the gap wasn’t filled in the drop down, a bad sign, according to chartists. However, Cramer likes Qualcomm’s fundamentals; the company has a 20% growth rate, a strong product cycle, is taking market share and has $14 billion in cash. Cramer thinks Qualcomm will benefit from China’s $40 billion plant to upgrade telecommunications. Its margins are 90% and 3G penetration may grow from 40% to 70% or 80%. Cramer would look beyond the chart and buy Qualcomm.
The story of Wal-Mart is already widely known. How should investors play Wal-Mart’s strong earnings when it is too late to buy the retail giant? Wal-Mart mentioned its intention to use more private label brands and customers find new ways to save money in the current economy. Private label brands are 5-20% cheaper and it has been predicted private label growth will be 40%. This should be good news for Ralcorp and Treehouse Brands, which have already seen an upside of 12.5% and 15.7% respectively since December. Both have plenty of cash for acquisitions and may get raised estimates. Ralcorp derives 17% of its revenue from Walmart and Treehouse, 13%, and the numbers will probably increase. Both companies trade at just 15 times 2010 earnings, and Cramer is bullish.
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