Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, March 23.
Ten Stocks to Watch: Exxon Mobil (XOM), JP Morgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), Chevron (CVX), General Electric (GE), AT&T (T), Microsoft (MSFT), IBM (IBM), Procter & Gamble (PG)
The market rallied on the rosier picture painted as a result of new reforms, but does the rally have legs? Cramer chose ten barometer stocks to watch.
Exxon Mobil: With oil climbing to $50, Exxon caught some gains on Monday.
JP Morgan: This bank's 25% jump might be very telling, since JP Morgan may well be a bellwether stock. After all, at least one bank needs to be able to buy up the toxic and good assets. If a bank like JPM is up to the task, Cramer sees a 2,000 point gain in the Dow.
Wells Fargo: Just weeks ago, there was talk of nationalizing this bank, which rose 24% in the rally on Monday and seems to be signaling a bottom in housing.
Bank of America shot up 26% and doubled its March 10th stock price. While Bank of America has a lot to lose if government reforms don't work out, Cramer thinks this bank is the best lottery ticket on proposed legislation.
Chevron: Rising oil prices are a boon to Chevron, which has carried on with its drilling plans.
General Electric: This conglomerate recouped its losses from last week and is stable financially. Cramer thinks GE is a tell on the global markets.
AT&T: Cramer is looking at this company as an indication that inflation will not be an obstacle to recovery.
Microsoft, IBM: While Microsoft isn't Cramer's favorite tech stock, he gives the company credit for leading the tech rally along with IBM, which reported a strong quarter and should give a solid performance in 2009.
Procter&Gamble: While strength in the consumer staples is usually an indication of a weak economy, but in past months, consumers were even skimping on PG's products. Cramer expects PG to stay strong because it is a weak-dollar play, given its international exposure.
Cramer thinks the current rally has legs, thanks to the triumvirate of oil, tech and financials. He cautioned investors to take some profits.
Obama Changes His Tune: Fannie Mae (FNM), Freddie Mac (FRE), AIG (AIG)
Obama has changed his tune and so has Cramer, who is less critical of the President's policies and their effect on the market. However, hedge fund managers are upset that Obama plans to make regulations of hedge funds similar to those fo mutual funds. Cramer applauds this move, and notes that hedge fund redemptions put constant pressure on the markets; full disclosure is needed so problems can be adequately dealt with. Obama also intends to tax hedge fund manager's wages as ordinary income, whereas in the past these funds were transformed into capital gains, which were taxed at a lower rate. Obama's plans transcend hedge funds, and include pay reforms which would level the playing field, and may make the gigantic wages of executives at companies like AIG, Citigroup, Fannie Mae and Freddie Mac a thing of the past. Cramer agrees with these reforms, even the The Street is up in arms. The only Obama reform Wall Street can stomach is the proposal to buy back toxic assets, news which brought up the Dow by 500 points.
Earnings are no longer an accurate measure of a stock; many companies are withholding guidance and often estimates are too high to expect any kind of upside surprise. However, Cramer thinks a dividend hike is a sign of health. Air Products has declined from $106 to $55.90 and yet it raised its dividend a penny because the decline is slowing; Cramer sees a potential bottom soon. The company supplies Taiwan Seminconductor, Corning and Xilinx, which have been performing well lately. The weak dollar will help Air Products which gets 53% of its revenues from overseas. While the dividend is not so generous at 3.2%, any dividend increase in the current climate is a bullish sign.
CEO Interview: Herbjorn Hansson, Nordic American Tanker (NAT)
Nordic American is Cramer's favorite shipping stock, and the fact the company has no debt, $600 million in cash and a safe dividend even in a tough industry is indicative of future success. Hansson told Cramer that it is in a position to buy up competitors. The company is thriving amid the Contango trade as oil is bought and stored so it can be sold at higher prices. At $50, oil is not done going up said Hansson, thanks to growth in China which "is not going back to bicycles" in spite of experiencing some of the global recession. Herbjorn was confident of his company's superiority over the competition; “When the others have water up to their cheeks,” Hansson said, “we are barely wet on our toe.”
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