Cramer's Mad Money - Five Market Fears (5/11/09)

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Includes: COP, FCX, GEOY, PEP, RCL, USB, VIAV, WFC
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday May 11.

Five Threats to the Market

While Monday's pullback was not unexpected, Cramer said investors should use the opportunity to prepare themselves for what could go wrong in the market.

1. Unemployment: Companies are reporting great quarters, but the number of jobs lost needs to keep decreasing if there is going to be a sustained recovery. If unemployment claims go back over 600,000 in a week, there might be a cause for worry.

2. President Obama: The President needs to remain supportive of the stock market and should not continue containing his harsh criticisms. He should also avoid giving punitive taxes, since companies have already suffered enough.

3. Inflation: money-printing has brought on inflation fears, but Cramer thinks they are unfounded. Citing an article by Ron Insana, Cramer says the current situation of cheaper housing, falling car sales and a troubled financial sector are signs of deflation not inflation.

4. The Banks: While the media is skeptical and claims Geithner's stress test has no teeth, big money is buying banks. Cramer thinks there are some good deals including BB&T (NYSE:BBT), Capital One Financial (NYSE:COP) and U.S. Bancorp (NYSE:USB). He sees a potential performer like Wells Fargo (NYSE:WFC) which saw its stock price rise dramatically.

5. Gasoline Prices: The one aspect of the economy most out of our control is the price at the pump; if the cost of fuel increases, the results could be disastrous for the already challenged consumer.

In spite of these five worries, Cramer says he is still bullish ont he markets.

New IPO: DigitalGlobe (NYSE:DGI), GeoEye (NASDAQ:GEOY)

There's nothing like a low-priced IPO to get investor's back in the market, and Cramer thinks satellite imaging company, DigitalGlobe is worth buying between $16 and $18. In the area of satellites, DigitalGlobe basically has a duopoly with GeoEye, and the company which will trade under the symbol DGI currently has two satellites in space and is planning to launch a third this year. Cramer thinks $16-$18 is very cheap, and even if a few things go wrong with the company, it will continue to be a good price. If DigitalGlobe traded at GeoEye's 18 multiple, it would be a $27 stock. Cramer would pay up to $22 or $23 for DigitalGlobe and notes the success rate of underpriced yet solid IPOs; many are up 20% after the first day and still see around 4o% gains a year later.

CEO Interview: Royal Caribbean Cruises (NYSE:RCL), Richard Fain

Royal Caribbean is a peculiar stock to perform during a recession. However, Cramer notes the stock is up 24% since last year. While Richard Fain acknowledges that customers are not reserving places far in advance, it is not too hard to predict demand. He admitted the quarter was "miserable" but the stock jumped nevertheless because expectations were low. Sales are down, but Fain expects this to change as the economy recovers. When asked about swine flu, Fain replied the panic is already starting to abate. Cramer says he is a buyer of Royal Caribbean under $12 a share.

Mad Mail: Pepsi (NYSE:PEP), Freeport McMoRan (NYSE:FCX), JDS Uniphase (JDSU)

Cramer blamed Pepsi's takeover bids for keeping the stock price down. Since it is at such a low level and is basically a good company, he would not sell it, but thinks Pepsi will miss out on a consumer staples rally. Cramer told another viewer to take profits in Freeport McMoRan after its jump from $27 to $50. Cramer threatened another viewer that he would call social services if he bought JDS Uniphase for his one-year-old son.

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