Cramer's Mad Money - Apple's Unbelievable Price Target (10/20/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday October 20.

Apple's (NASDAQ:AAPL) Unbelievable Price Target: Motorola (MOT), Nokia (NYSE:NOK), Microsoft (NASDAQ:MSFT), Dell (NASDAQ:DELL)

Apple's (AAPL) management said the magic words on its earnings call; "The company cannot meet demand." This is incredible given the economic slowdown, and there is no reason to wonder why Apple beat earnings estimates by 50%. In spite of formidable competitors like Motorola (MOT), Nokia (NOK), Microsoft (MSFT) and Dell (DELL), Apple is still coming out ahead and has plenty of room to grow; the company still controls just 3% of the cell phone market and 4% of the personal computer market. Cramer raised his target for Apple from $264 to $300, and says this is a conservative estimate. He upped his earnings per share prediction from $12 to $13, and given that level times Apple's 30% growth rate, the target should be $390, but Cramer set it at $300 “Because you would never believe me, so I lopped off 90 bucks to be more realistic.”

Options for Options: OptionsXpress (NASDAQ:OXPS) CEO David Fisher

Everybody is getting into options, or at least it seems like it; OptionsXpress (OXPS) is up 5.3% since September, with 6,600 new accounts, September average revenues were up 6% from August, and there was a gain of 2% more commissions per trade. Options comprise 59% of the OptionsXpress retail trades, and Cramer thinks the stock is the best way to play options without buying them. David Fisher explained more investors are opting for options over low dollar stocks. He also says volume has increased thanks to mobile applications that allow investors to research and trade options from their smart phones. David Fisher plans to expand educational resources to allow customers to learn more about options.

Deere (NYSE:DE), Caterpillar (NYSE:CAT)

“The charts are screaming, ‘All things machinery are looking up,’” said Cramer. However, it pays to listen to a different story: the fundamentals. Machinery seems to be a hot sector, but Cramer urged viewers to look to the end markets. Caterpillar might be headed up, but crop predictions set below 2008 levels and decreasing income for farmers mean there will be less demand for new farm equipment. In addition, the agriculture sector is being left out of Obama's stimulus plan. However, Caterpillar reported a strong quarter and Cramer thinks it should see more upside.

Galleon and Company

Cramer praised the government for going after Galleon Management, but he thinks the next on the list should be the money managers who nearly brought down the financial sector with their aggressive short positions and rumors about doom and gloom that destroyed confidence. Given that there are records of every trade, investigating these misdeeds shouldn't be difficult, but the main problem is that there isn't sufficient outrage against market manipulators. Cramer thinks it is wrong for them to get off "scot-free; let’s pursue them as aggressively as the government is pursuing Galleon."


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