Cramer's Mad Money -The Most Compelling Stock in the Market Today (6/11/09)

 |  Includes: BAC, GIL, HSH, MSFT, PPG
by: Miriam Metzinger

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

Bank of America (NYSE:BAC) Comeback

Cramer discussed the clash of the analysts over the fate of Bank of America and sides with the bullish view. Morgan Stanley analyst Betsy Graseck predicts Bank of America will generate $2.54 a share next year, more than double the average estimates of just a dollar. While Meredith Whitney thinks Bank of America is only going to generate 20 cents, Cramer agrees with Graseck, because the bank is benefiting hugely from its Merrill Lynch acquisition, and its OREO (Other Real Estate Owned) is likely to be positive and can be unloaded as the economy starts picking up. Cramer is impressed that this bank, which not too long ago was threatened with nationalization, is making such a comeback; he thinks Bank of America is “perhaps the most compelling buy in the whole stock market today.”

CEO Interview: Charles Bunch, PPG Industries (NYSE:PPG)

While the market seems to be picking up, it is still a good idea to hedge with a defensive play that pays a good dividend. Cramer thinks chemicals maker PPG may be the best of both worlds and has the advantages of a defensive stock, including a 4.6% dividend, but significant growth potential during a recovery. Bunch said the company has reduced its exposure to the automotive industry from 33% to 15%. Increased demand in China is helping the company, but Brand was more enthusiastic about the "Transitions" brand of eyeglass lenses which is a $1 billion business and is in 20% of all glasses sold in the U.S. Cramer is a buyer of PPG under $45 a share.

Sell Block: Gildan Activewear (NYSE:GIL)

While the retail sector might seem like a good place to invest, Gildan is not a typical retail stock, warned Cramer. While it produces t-shirts and sportswear, these items are "blanks" sold to businesses, non-profits, schools and sports teams which put their own logos on the clothing. In fact, only 10% of Gildan's profits come from retail, so it is not a play on the consumer. In fact, as institutions cut costs, one of the first things to go are these "feel good" items; Broder, a blank clothing distributor, is teetering on the edge of bankruptcy and comprised 23% of Gildan's sales. The company manufactures everything itself, and therefore has high fixed costs, but at the same time, it unwisely decided to build 10 new factories. Although the stock is up 123% from its March lows, Cramer would sell teh bounce and not buy Gildan.

CEO Wall of Shame: Microsoft (NASDAQ:MSFT), Sara Lee (SLE)

Cramer has been taking suggestions from viewers concerning who should be the next inductee on the Wall of Shame. Microsoft chief Steve Ballmer was suggested, but Cramer said that while the stock price has declined 58% since Ballmer took the reigns in 2000, Dell is down 69%, Cisco has declined 62% and Intel dropped 64% in the same period. Cramer also notes Ballmer is doing positive things for the company, likes Microsofts new search tool, Bing, and applauds the company for walking away from the Yahoo acquisition.

Brenda Barnes of Sara Lee, however, has earned her place on the Wall of Shame. The stock has declined 55% since 2005 when Barnes took over, while Heinz, Kellogg and General Mills are up for the same period an average of 25%. Cramer thinks the best news for Sara Lee would be the departure of Barnes, and welcomed her the the CEO Wall of shame.


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