Cramer's Mad Money - Hey Apple: Chips Are Not a Commodity (4/30/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday April 30.

CEO Interview: David Aldrich, Skyworks Solutions (SKWS), Apple (NASDAQ:AAPL)

Chips are a hot "commodity" although Skyworks CEO David Aldrich would not agree with that statement. On "threats" from Skyworks' client Apple that it is going to start making its own chips for the iPhone, Aldrich insists that chips are not commodities that can be made by just anyone and Skyworks chips will still be in demand. Complex technology requires more advanced chips and Skyworks is still the leader in this industry. Aldrich also told Cramer that inventories are down and in line with customer demand and its balance sheet is clean. Cramer recommends Skyworks.

Starbucks (NASDAQ:SBUX), First Solar (NASDAQ:FSLR), Dow Chemical (NYSE:DOW), Owens Illinois (NYSE:OI), NYSE Euronext (NYSE:NYX), International Paper (NYSE:IP), Apple (AAPL), Research in Motion (RIMM), Google (NASDAQ:GOOG), (NASDAQ:AMZN)

It looks like businesses are doing everything right with all of the upswings this earnings season, but Cramer observes that cost-cutting is the main secret behind the successes of stocks like Starbucks and the NYSE Euronext, which will only really improve when the economy actually recovers. First Solar was an exception to this rule and actually saw dramatically improved sales, but the reason Cramer said he didn't see the potential upside in Dow Chemical, a company' whose CEO Andrew Liveris appears on the Wall of Shame, and Owens Illinois was because he couldn't predict the extent of the cost cutting measures these companies have undertaken. However, Cramer's four horsemen of tech, Apple, Research in Motion, Google and Amazon saw genuine growth. "Make no mistake, these earnings had nothing to do with business getting better," said Cramer.

Watsco (NYSE:WSO)

Cramer disputed a Piper Jaffray downgrade of Watsco, the country's largest distributor of heating and cooling equipment, from a buy to neutral. Cramer cited Robert Toll's bullish statements on Mad Money as indication of a housing turnaround by this summer and likes Watsco as a play on Obama's stimulus plan which calls for energy-efficient heating and cooling systems. He explained it is a matter of perspective; the analyst sees a stock that is up $14 from its low but Cramer sees a stock that is $18 lower than its September 2008 highs. He also likes the stock's 4.4% yield and expects Watsco to move back to its September 2008 high of $61.


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