Cramer's Mad Money - Haven't You People Ever Heard of a Correction? (5/7/09)

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

Morgan Stanley (MS), Wells Fargo (WFC), Goldman Sachs (GS)

Cramers message to those who despaired over the market's drop on Thursday was "Haven't you people ever heard of a correction?" He told viewers that it was unrealistic to expect stocks to just keep going up after a 30% bull run without a correction of about 5 to 10%. Now that nationalization of banks is "off the table" Cramer would buy secondary offerings of Morgan Stanley and Wells Fargo and strong banks like Goldman Sachs.

ON Semiconductor (ONNN), Xilinx (XLNX), Taiwan Semiconductor (TSM)

Cramer said he likes tech speculative pick ON Semiconductor, which makes power-management components for tech gadgets on the strength of the company's fundamentals and rising demand. The company reported better-than-expected sales and gains in ON's peers, Xilinx and Taiwan Semiconductor bode well as inventories are down and sales across the sector are increasing. Cramer also discussed the company's notebook power management and transition from commodity components into specialized solutions. The Chinese are devoting $40 billion to wireless buildout alone, which will benefit ON. The company also has a clean balance sheet. Cramer would use the dip in financials as an opportunity to buy ON.

Federal Realty Investment Trust (FRT) President and CEO, Don Wood

Don Wood says that while retail is not performing well, the bad news is already priced in, and that while some of Federal Realty's tenants have gone bankrupt, the company distributes its risk across the country. On the subject of REITs, Wood said Federal will continue to pay a dividend in cash rather than in stock. Don Wood's basic attitude about the sector is that the worst is over.

International BancShares (IBOC),Texas Capital BancShares (TCBI), Sterling BancShares (SBIBN), Huntington BancShares (HBAN)

Cramer wasn't surprised by the jump in International Bancshares; it was inevitable given how hated the company was. Bears criticized the bank's lack of transparency, loan losses and the $1.4 billion in real estate and construction loans which are maturing soon. These concerns sent the stock down from $35 to $7, but Thursday's stress test news sent the stock up to $13. After an 86% gain, Cramer would take profits, and for those in search of similar stocks, Cramer suggests Texas Capital BancShares, Sterling BancShares and Huntington BancShares.

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Comments

[BxCapricorn:]

I read through the entire SCAP last night and having looked at the foreclosure numbers and credit card delinquencies, I'm fairly certain I'll be hearing more and more about corrections going forward.

I saw a video of Cramer talking to his portfolio analyst, and he looked beaten down. You'd think he'd be enthused about this incredible banking turn around. The eyes don't lie...the mouth does. This market is so overbought, I'm glad it's with Goldman Sachs money and not mine.

May 08 06:18 PM

[Missing_Link:]

On May 08 06:18 PM BxCapricorn wrote:
> I saw a video of Cramer talking to his portfolio analyst, and he
> looked beaten down. You'd think he'd be enthused about this incredible
> banking turn around. The eyes don't lie...the mouth does. This market
> is so overbought, I'm glad it's with Goldman Sachs money and not
> mine.

After Cramer got the talking-to from his boss for his statements talking down Obama and the markets, I doubt he's allowed to say anything seriously negative about anything bigger than individual stocks any more ...

May 09 02:07 AM

[BxCapricorn:]

Here's the correction...

online.wsj.com/article...

Cramer was right, but for the wrong reasons.

May 09 07:17 AM

[FloridaBoy2:]

Cramer does seem to have become less vocal but I think that is a result of introspection and not being silenced by whomever. I have to give him credit for what he does to help 'home gamers'. I think he really does want them to suceed. However, he does have pay sites and is certainly not going to hurt that revenue stream by telling all on Mad Money. I don't subscribe to any of them but am considering
a trial.

Overbought market? Yes and no. There is still a lot of value out there. There will be a correction but the trend is your friend. But tread with caution.

Banks? The truth will be known in a few years. There will be some that prosper by acquiring weaker rivals.

May 10 11:08 AM

[Matt Miller:]

Cramer = Loser.

May 10 07:16 PM

[BobP:]

Seems as if Cramer threw tantrams until Bernanke dropped interest rates and kept dropping them till the market tanked down below 7,000. So Cramer now wants what? I'm afraid to ask.

May 12 09:20 PM