Cramer's Mad Money - The Wrong Stocks at the Wrong Time (5/5/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday May 5.

The Wrong Stocks at the Wrong Time: Kraft (KFT), Molson Coors (NYSE:TAP), Heinz (HN), Campbell (NYSE:CPB), Lilly (NYSE:LLY), Johnson &Johnson (NYSE:JNJ), Bristol Myers Squibb (NYSE:BMY), Pfizer (NYSE:PFE), Abbott Labs (NYSE:ABT), Celgene (NASDAQ:CELG), Chesapeake Energy (NYSE:CHK), Anadarko Petroleum (NYSE:APC), Devon Energy (NYSE:DVN), Research in Motion (RIMM), Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Disney (NYSE:DIS)

So if the economy is recovering, what's the reason for Tuesday's downturn? Cramer says the wrong stocks rallied. Kraft saw an upside following earnings and brought up Molson Coors, Heinz and Campbell with it. Other defensive stocks followed suit: Johnson&Johnson, Bristol Myers, Pfizer, Abbott Labs, Celgene, Chesapeake Energy. The rally in defensive stocks ran counter to the selling that has been good for market leaders; before yesterday, investors were selling defensives to buy cyclical names. Other contributing factors were Chesapeake's poor quarter along with Morgan Stanley's downgrade of Anadarko and Devon. However, Disney's strong results and solid performance from the four horsemen of tech: Google, Apple, Research in Motion and Amazon provided a silver lining for the market's clouds.

Tech Spec: Brocade (NASDAQ:BRCD), Cisco (NASDAQ:CSCO), IBM (NYSE:IBM)

Even though the tech sector has rallied, Cramer thinks stocks in this space have farther to go on the upside, especially speculative names like Brocade. Cramer's four horsemen of tech: Apple, Google, Research in Motion and Amazon, keep galloping, but he would suggest taking some risk. Currently Brocade has signed an OEM agreement with IBM, which gives it the advantage of having a winning brand name on its products. The recession has taken its toll on competitor Cisco, and Brocade intends to enter the blade-switch market. Even though Cisco has 25% market share in this business, Brocade doesn't need to prevail to make some serious profits. Brocade's sore spot, however, is its $1.2 billion in debt from the acquisitions it made in 2007. However, Cramer thinks concerns over this are overblown. He would wait for Cisco's earnings report on Wednesday and would buy Brocade on an expected dip.

Special Guest: Emeril Lagasse Las Vegas Sands (NYSE:LVS)

Cramer asked Bam! founder Emeril Lagasse who is opening his 11th fine-dining establishment late in May at the Las Vegas Sands casino in Pennsylvania about how the economy is affecting his business. He notices more people are eating out and said the downturn was actually good for his brand-name culinary products because people were cooking at home. He has offered alternatives for cash-strapped diners such as a "wines-for-the-times" list of inexpensive wines and the option to have smaller portions at lower prices.

Legasse said he's also made changes at his restaurants to adjust to the changing economic landscape. He introduced a "wines-for-the-times" list of cheaper wine alternatives and is offering smaller portions at more affordable prices. He also promoted his book Emeril at the Grill, scheduled for release this summer.

Off the Charts: Cliffs Natural Resources (NYSE:CLF), Arch Coal (ACI)

While Cramer usually compares technical analysis to some kind of hocus-pocus, Cliff Natural Resources' chart is an exception to the rule. While many would be put off because of the stock's big gain recently, the weekly chart shows no upward move yet. In addition to the chart's showing upside potential, Cramer notes Cliffs is due for a lift because it has been flattened by mutual funds, some of which sold their entire positions, it was once at $120 and trades at $27 and its peer Arch Coal was recently upgraded.


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