Cramer's Mad Money - This Is Not Your Father's Honeywell (2/24/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday February 24.

Waiting For Obama

Cramer said Obama better start talking to the American public and had some suggestions for the new President.

Nationalize the banking system, not the banks: Nationalizing the banks is dangerously close to Communism and might make the situation worse. Instead, the name of the game is forebearance; banks should issue preferred shares to the FDIC in return for credit notes from the federal government. This will give banks the confidence to start lending.

Second, the government should issue 40 year, 4% mortgages to all homeowners. This will prevent further house price depreciation and will halt the epidemic of foreclosures. It isn't enough to reduce interest rates, but principle also has to be adjusted. To prevent losses, he suggested Issuing certificates of equity

Off the Charts: A Rally?

Even as things look bleak, Cramer sees evidence of a rally lasting into March. According the charts, the markets are oversold and have nowhere to go but up. The current decline has resulted in lower lows than in October and November. Charts of put/call ratios indicate a coming rally, because there is far too much negativity.

The fundamentals, however, tell a different story. To be on the safe side, he would use rallies to sell stocks to generate cash for buying them back when on declines. Earnings estimates for many stocks are too high, which is not a good sign.

Executive Decision: CEO Dave Cody: Honeywell (HON)

The current downturn is separating the men from the boys, and Cramer thinks Honeywell is up for the challenge, given strong management, healthy yield and new products. Cramer invited CEO Dave Cody on the show to discuss the companies innovations. "This is not your father's Honeywell" declared Cody who discussed the company's bulletproof vests, green and energy efficient turbocharges, fire safety products, new jet engines and a military reconnaissance helicopter that weighs a mere 14 pounds. When asked about Honeywell's exposure to aerospace, Cody says it plans to sell fewer engines and to compensate by inventing new markets and making acquisitions. While the auto industry is in decline, Cody said the company's small penetration leaves room for expansion. He acknowledged that there has been some disappointment in China. Cramer is bullish on Honeywell.

Mad Mail: Bank of Montreal (BMO), Royal Bank of Canada (RY), Visa (V), Mastercard (MA), Goldman Sachs (GS)

When a caller asked Cramer about buying Bank of Montreal and Bank of Canada for their abundant yields, the Mad Money Host reiterated his bearishness on financials and said the only stocks in that sector he is recommending are Visa, Mastercard and Goldman Sachs.

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Comments

[cashew:]

Cramer should do some research before commenting on Canadian banks which are doing fine !

Feb 25 09:16 AM

[Richard Col...:]

Cashew, you are correct to pay no attention to Cramer.
When we finally, at last, rot-o-rooter the "Wall Street toilet, Cramer will be flushed along with the other debris.

Cramer would be a "Madoff" himself if he were smart enough. The only way he happened to get the job has? He flunked out of clown school!

Can you say "dead-weight"?

Feb 25 12:01 PM