Cramer's Mad Money - It's All about Apple (10/16/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday October 16.

Apple (NASDAQ:AAPL), AT&T (NYSE:T), Boeing (NYSE:BA), United Health (NYSE:UNH), Comercia (NYSE:CMA), M&T Bank (MNT), Huntington Banchsares (NASDAQ:HBAN),

Cramer's strategy for the coming week is to buy Apple (AAPL) after its earnings are announced, when it will discuss temporary production holdups with its handsets. This difficulty was resolved in the third quarter, and Apple's fourth quarter could be "huge." Cramer urged investors to be quick in buying, because AT&T (T) reports on Thursday, and is expected to make bullish comments about the iPhone. "All other data points in next week’s game, frankly, are dwarfed by this Apple trade,” Cramer said, “and it is a trade. I want you in it.”

Any further Dreamliner delays should provide opportunities to buy more Boeing (BA), which reports on Wednesday. In the coming week, these companies, which are tells on their respective sectors, will be reporting: United Health (UNH), and in the commercial real estate space, Comerica (CMA), M&T Bank (MNT), Huntington Bancshares (HBAN).

Cramer likes Wells Fargo (NYSE:WFC), but analysts are often annoyed with the bank because it doesn't offer a question and answer session on its conference call. He recommends buying on an expected decline. Caterpillar's (NYSE:CAT) results will indicate the health of the whole economy; this is also true of Nucor (NYSE:NUE), which reports Thursday.

Getting Un-Stumped: Hatteras Financial (NYSE:HTS), Diodes (NASDAQ:DIOD)

Cramer did some research on stock questions that stumped him during last week's lightning round sessions. Mortgage real-estate investment trust Hatteras Financial (HTS) offers a 17% dividend that Cramer says is a "major red flag." He says Hatteras is only worth buying if one believes the Fed is not going to raise interest rates for another two years; a rate increase is guaranteed to "pummel" the stock.

Diodes (DIOD) is a low-cost semiconducter equipment company that tends to outperform the sector. Increasing demand for chips has caused the company to raise its sales estimates. While Cramer prefers ON Semiconductor (ONNN), he also likes Diodes.

Cogent (COGT-OLD), L-1 Identity Solutions (NYSE:ID)

Cramer continued his series on security stocks and featured biometrics stocks Cogent (COGT-OLD) and L-1 Identity Solutions (ID). The latter is a diversified company and had developed a recognition device that is being used in Iraq and Afghanistan. L-1 also makes drivers' licenses and its contracts with states continue to grow. In fact, the company has a backlog of $1.1 billion, twice its size.

Cogent is a pure play on fingerprint identification and has many clients overseas. Its U.S.-VISIT program, which verifies the identities of foreign visitors, comprises half of Cogent's revenues, and while there is some concern another company might take this contract, Cramer isn't worried.

Cogent has $530 million in cash and no debt, while L-1 has $463 million in debt and $16.9 million in cash. L-1 says it will be able to pay off a good part of the debt next quarter. Cramer sees upside for both companies and thinks the choice is best left to the investor between a pure play with no debt or a diversified company with debt.


“Some companies are practically monopolies simply because no one else can come close to doing what they do,” Cramer said, referring to ARM Holdings (ARM) which designs chip technology used in gadgets and smart phones. ARM currently controls 95% of the market, and five chips in every smartphone are created thanks to ARM's technology, which is licensed out to tech's biggest players, like Qualcomm (NASDAQ:QCOM).

ARM is moving into Intel (INTC) and AMD's (AMD) space with its new processor for PCs and netbooks. These processors use less energy and extend battery life. ARM has made a deal with Google on its Chrome operating system which will help give ARM more exposure to the netbook market. Although ARM is up 101% since March, it is still cheap, because it has a 30% growth rate, higher than its multiple of 25. "I can't think of a better stock than ARM Holdings to replace Starent Networks," said Cramer, "This is one of the best long-term stories in the semiconductor world."


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