Cramer's Mad Money - Buy Bank of America (3/10/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday March 10.

Buy Bank of America (NYSE:BAC)?

Technicals might well be the only strategy that is working in today's market. The charts predicted the rally on Tuesday and it might provide a case of buying Bank of America, even though the stock has already moved up. Cramer used DeMark analysis to show that not only is Bank of America's fall finished, but it could rally into the double digits. The trend for the S&P 500 is similar, noted Cramer, but everything depends on what happens in Washington. If the uptick rule is reinstated and Ben Bernanke fixes mark-to-market rules, this positive prophecy for financials and the market in general will be fulfilled.

"Everything rides on Washington," said Cramer.

Comfort in Chocolate: Hershey's (NYSE:HSY)
In the dismal economy, many people may be indulging in a favorite comfort food and are willing to buy top quality brands of chocolate. Private labels are not successfully taking share from Hershey's, a name synonymous with chocolate; Hershey's exposure to private labels is a mere 3% of revenues and the company holds 36% market share. Although there has been some slowing down of sales, low-cost advertising may sweeten Hershey's prospects and help fend off competition from Mars; Hershey expects to increase spending on advertising by 20% in 2009. The Mars-Wrigley merger might be slow to integrate and may give Hershey an edge.
The company beat The Street's estimates by 5 cents and saw sales for its main brands rise by 8%. Even price increases didn't threaten sales. The company gave growth guidance of 2% to 3%. Cramer thinks the 4% dividend is safe because of the company's strong cash flow. While it is trading at 15.8 times earnings, Hershey is just a tad above its 52-week low, and Cramer thinks it is a buy. Analysts have been negative, but Cramer sees room for an upgrade. Rumors of a merger with Cadbury may or may not be true, but a merger could bring the stock from $30 to $35, according to Cramer, and will help the company diversify overseas.

The Rally Will Continue: UltraShort Financial Proshares (NYSEARCA:SKF), Texas Instruments (NYSE:TXN), Research in Motion (RIMM), Analog Devices (NYSE:ADI), Skyworks Solutions (NASDAQ:SWKS), Chevron (NYSE:CVX), Citigroup (NYSE:C), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS)

Cramer attributed Tuesday's rally to overwhelming bearish sentiment that moved the market up. He thinks this rally has legs gave several reasons:
The uptick rule may be reinstated: this is good news for financials and bad news for UltraShort Financial Proshares which has been instrumental in decimating values of financial stocks.
Texas Instruments said inventories are low and demand for 3G cell phone components are increasing. This information is good for Research in Motion, Analog Devices and Skyworks Solutions.
The bearish news on oil is overdone. This could actually be good for the sector, along with the fact that Chevron is doing well.
Ben Bernanke may adjust mark-to-market accounting. This reform will help financials. Also, Citigroup's quarterly numbers will mean Morgan Stanley and Goldman Sach's data will look even brighter.


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