Cramer's Mad Money - You've Come a Long Way, Sallie (10/21/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday October 21.

You've Come a Long Way, Sallie: Sallie Mae (SLM)

Not only should investors avoid safe, boring strategies, like buy and hold or putting all of one's money in an index fund, but Cramer thinks everyone can afford to speculate a bit. Viewers who followed his advice in June to buy Sallie Mae (SLM) have seen a 62% gain, 21% on Tuesday alone. The situation looked hopeless for Sallie Mae, given its dismal situation a year ago and Obama's proposal to revamp student loans. Sallie Mae has come a long way since its low of $7 and fear of bankruptcy. Management said the 26 cents earned per share this quarter will increase to 50 or 55 cents next quarter. Cramer would take some profits in Sallie Mae and let the rest run.

CEO Interview: Ron Hermance, Hudson City Bancorp (HCBK)

Cramer noticed a strange trend; banks that were almost destroyed in the recent downturn are performing well, while those that stayed strong are now getting punished. Hudson City Bancorp (HCBK) has dropped 24% in 12 months. Even with net interest margin, deposit growth and loan originations up for the quarter, the stock's performance failed to impress.

However, Ron Hermance says Hudson City is like a baseball player batting a .350 rather than home runs, and he thinks there is excess negativity about the New York City Metro Area; prices won't fall as much as expected. Hermance discussed the bank's strong dividend, which has never been cut and Hudson City's custom of returning 50% of its profits to shareholders. After 11 years of record growth, Hermance says he doesn't expect the story to change. Cramer says Hudson City is as "good as gold" and continues to recommend the stock.

CEO Interview: Michael Ward, CSX (CSX)

Since it transports many important products throughout the U.S., CSX (CSX) has "a better handle on what is going on in the country than any other company," according to Cramer. CSX beat expectations and raised guidance, and this "best-of-breed company with top-notch management" indicated that the worst of the recession is over. Michael Ward sees 3-6% rise in volume across all markets and expects further increases in volume. While Cash for Clunkers has received plenty of criticism, Ward credits the program with the shipping of 10 million new cars in the past year. CSX also strives to be energy efficient, and thanks to cost-cutting, may be able to rehire workers laid off last year. Cramer recommended CSX and called it "the best railroad in the country."

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Comments

[Liz:]

If everyone put their money in index funds, bloviating idiots like Cramer would have to find other lines of work:


Cramer on Bear Stearns (Five Days Before It Imploded): "BUY! BUY! BUY!"
Cramer on Lehman: See Bear Stearns
Cramer on Wachovia: "Well-run company. CEO is a decent, honorable man."


The advantage to having an index fund is that even if you take a bath on WaMu or Bear Stearns, you would still have equity in Morgan Stanley or Northern Trust. Your entire portfolio wouldn't go down the drain.

Oct 22 08:37 AM