Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday August 22. Click on a stock ticker for more analysis:
Making Money on Madden: Electronic Arts (ERTS), GameStop(NYSE:GME)
Cramer discussed the release of Madden NFL 2007, aka "the latest installment in the mightiest video game franchise in the world". Contrary to conventional wisdom, he did not suggest buying shares in the games maker, ERTS, as that company is mired in an options backdating scandal. Cramer quotes from his own book that "accounting irregularities equals SELL!". Cramer didn't recommend any of the other game or console makers except for GameStop, a video game retailer. Regarding that company, Cramer said that "you buy this stock, you're buying it because you think it's going to have a blow-away 4th quarter, but I'd hang onto it a little long frankly."
Cramer recommended turning to secular growth stocks as a way to make money in spite of the current economic downturn. He mentioned three little-known stocks: Sigma-Aldrich, Texas Utilities and Sonoco Products. He said "for the last three months, they've been rocking. And I believe they will rock for the next three months, as the cyclicals disappoint."
SIAL makes biochemicals and organic chemicals and exhibited a 12.5% increase in its second-quarter profits. Cramer said it has growth and momentum, despite the setbacks it suffered last quarter. Cramer called it "an arms merchant to the drug companies" and said it had not been receiving that much attention until now.
TXU is a coal-burning utility company that is "cheap and somewhat neglected". The company is currently trading at less than one times its growth rate. Cramer thinks that it is not getting the notice it deserves, especially since the turnaround the company accomplished by decreasing its debt.
Cramer considers SON, a packaging company, to be the arms merchent to the food companies. The company is "making a killing," Cramer said, thanks to the food companies' comepetition over packaged goods.
The Inside Scoop: Dynegy (NYSE:DYN)
Cramer encourages viewers to pay attention to insider buying as a sign that a stock can reward its buyer with profit. He cautions that insider buying is not a sure sign with all stocks- as is the case with Vonage (NYSE:VG). "The insiders are buying it because they want to provide investors with a false sense of confidence," he said. In fact, this is the "worst-performing IPO of the year."
Dow Chemical (NYSE:DOW) provided a quick gain to shareholders when insiders started buying. Cramer draws a comparison to Dynegy, another stock that Cramer thinks can make shareholders money through insider buying.
Dynegy is an energy holding company that Cramer sees as ripe for takeover thanks to improving financials and an overall trend of consolidation in the energy market.
CEO Interview: David Demshur, CEO and Chairman, Core Laboratories (NYSE:CLB)
In response to Cramer's question as to what his company does, Demshur said that "it helps oil companies produce more oil and gas every day, and more importantly, it helps companies produce more oil and gas over the life of a field". He went on to specify that the company analyzes core samples from 800 of the currently producing 4000 oilfields to "understand how the fluid runs through the rock so we can extract more from it and leave water behind." Cramer said that this company is "the ultimate play" while oil is so high.
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