Cramer's Mad Money - TJX Companies: Discount King or Pawn? (8/24/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday August 24.

TJX Companies (NYSE:TJX): The Discount Pawn

Cramer began a weeklong series to search for the discount king. With the economy improving, discount names may not be performing as well as they were before, but there may still be room to grow in the discount retail space. TJX has seen a 4% rise in its stock price this quarter with a 4% drop in inventories. TJX also has a clean balance sheet, a generous stock buyback program and is planning to open new stores. However, TJX is really a discount pawn rather than discount king, said Cramer. The stock is up 67% year over year while the retail index is up 27%; the stock has no more upside left, he said, in spite of the fact that 15 out of 20 analysts have rated TJX a buy.

The company is having problems with its Marshalls and Homegoods business and now that retail is performing better and the sector is trimming its inventories, there is no longer a desperation to sell excess goods to TJX at low prices. Cramer said TJX's conference call was "grim" as management slashed earnings estimates. Cramer thinks TJX has seen better days and may be "off to the off-price bin itself."

Citigroup (NYSE:C), Fannie Mae (FNM ), Freddie Mac (FRE), Huntington BancShares (NASDAQ:HBAN), Fifth Third Bank (NASDAQ:FITB), Regions Financial (NYSE:RF), RF Micro (RFMD), TriQuint (TQNT), ADC Telecom (ADCT), Tellabs (NASDAQ:TLAB), On Semiconductor (ONNN), Cypress Semiconductor (NASDAQ:CY), Level Three Communications (NASDAQ:LVLT), AMD (NYSE:AMD)

Monday should have been an up day, but the market lost its gain due to froth, Cramer said. Investors were running heedlessly into stocks, regardless of value, and were speculating on the wrong companies. While Cramer has been recommending Citigroup, he thinks the stock was brought up too far too fast on Monday; ”Almost everyone who bought this stock today is hopelessly under water. That's the worst possible place to be and it will most likely cause more weakness tomorrow,” Cramer says.

Similarly, he thinks it is foolish to speculate on Fannie Mae and Freddie Mac when the future of these companies is uncertain, and they may have to give back much of their gains to the government. He would instead speculate on solid financials with good fundamentals like Huntington BancShares, Fifth Third Bank and Regions Financial. He also recommended stocks participating in the wireless internet revolution: RF MicroDevices, TriQuint, ADC Telecom, Tellabls, On Semi, Cypress Semi, Level 3 Communications and AMD.

Anadarko Petroleum (NYSE:APA) CEO Jim Hackett

Why are natural gas stocks rallying when the price of the fuel is dropping to its lowest level since 2002 and inventories are growing 19%? The secret behind the rising price of natural gas is the realization that it could be the U.S.'s next energy source, before wind or solar. Anadarko Petroleum is one natural gas stock that has rallied 40% since January in spite of a drop in natural gas prices, and is expanding its reach with discoveries in the Gulf of Mexico, Mississippi and Ghana, while it hedges against fluctuations in the price of natural gas.

Anadarko CEO Jim Hackett stated his belief that natural gas will be embraced in the search for alternative fuels. Natural gas is cost-effective, readily available and can generate electricity as well as fuel cars. Since 80% of the country's natural gas is provided by smaller companies, producing natural gas will include job growth that will be beneficial to the economy.

Mad Mail: People's United Financial (NASDAQ:PBCT), New Alliance (NYSE:NAL), Flowserve (NYSE:FLS), BGG (NYSE:BGG)

Cramer told one viewer that People's United Financial will stand firm while other banks will fail. He also likes New Alliance. Another viewer recommended Cramer include Flowserve in a nuclear index, but Cramer said although he likes BGG in this space, he is not bullish on nuclear power unless President Obama makes a clear statement about this alternative energy source.


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