Cramer's Mad Money - Cadence Has Faced the Music (5/6/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday May 6.

Cadence Systems (CDNS)

The list of what went wrong last year with Cadence Systems reads like horror story; this supplier of materials for chips saw its stock price tumble from $17 to $3, and its operating margins fall from 30% to -3%. The company dismissed its management, faced a threat of delisting by the Nasdaq and was overwhelmed by accounting problems that got Cadence in trouble with the SEC.

Why would anyone in their right mind buy this stock? Basically, things can't get much worse fand there is reason to believe that the future might actually look bright for Cadence. With demand raging for more efficient chips, the whole sector is en fuego. The company beat estimates when it reported on April 29, and there is reason to believe operating margins will be up. Cost cutting measures, including 12% employee cutbacks are helping the company balance its budget. It has fixed the accounting problem and expects $150 million in operating expense benefits. Cadence also has $2.20 in cash per share, and will be protected against an extreme drop in its share price.

CEO Interview: Airgas (ARG) Peter McCausland

Cramer admitted he made a mistake telling investors to sell Airgas last October; the company reported a better-than-expected quarter and may well beat again. Even though earnings were down, Airgas saw a record year thanks to cost-cutting measures. Cramer has been concerned about Airgas' past acquisitions, and McCausland replied the company sizes up potential purchases very carefully. However, manufacturing has been hit hard and the CEO admitted he has not seen an upsurge in manufacturing activity yet and has adjusted guidance. Cramer says he is sticking with Airgas this time around.

JP Morgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), Bank of America (BAC), Citigroup (C), American Express (AXP), Metlife (MET), Morgan Stanley (MS)

Cramer says the Bank Stress Test results provide another reason to believe the worst is over; JP Morgan, Goldman Sachs and Wells Fargo passed with flying colors while only Bank of America, Citigroup and Wells Fargo need more cash. Even the banks who didn't pass can find solutions easily: BAC can sell assets and transfer TARP money into common stock while Warren Buffet is giving Wells Fargo a hand. Geithner also said Metlife and Morgan Stanley were in the clear.

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round and his Stop Trading! Picks.

Get Cramer's Picks by email-- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com