Seeking Alpha
What is your profession? ×
Profile| Send Message|
( followers)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday December 22.

The Amazing Amazon (NASDAQ:AMZN), Wal-Mart (NYSE:WMT)

Amazon (AMZN) has had an amazing 168% run from $49.84 to $133.75, but according to the technical and fundamental story, it still has "plenty of upside." The charts show Amazon breaking out on high volume, even above its level during the dot-com boom in the 1990s. Although the stock seemed about to dip below its October level of $125, it bounced higher. The decline was in low-volume trading, and was not a strong indication of the general direction of the stock. Cramer thinks Amazon is a gift between $119 and $125, unless it falls below $119 on 100 million shares traded in weekly volume, but Cramer thinks this scenario is unlikely.

The fundamental case for Amazon is also strong; the company has moved beyond books and music and now is like an online Wal-Mart (WMT), and can even beat Wal-Mart's low prices. Amazon's lower costs and increased sales are a recipe for a 30% growth rate, which Cramer calls a "magic number" for money managers to start buying. Cramer thinks the stock should reach $216 from $134, and would use any decline as an opportunity to buy more.

Altria (NYSE:MO), Waste Management (NYSE:WM), 3M (NYSE:MMM), Philip Morris (NYSE:PM), Kraft Foods (KFT)

Cramer urged investors not to flee to CDs and Treasurys for safety; high yielding companies with strong growth potential are a better bet, and consistent dividends are "gifts that keep on giving." After spinning off Philip Morris (PM) and Kraft Foods (KFT), Altria (MO) is a pure domestic tobacco company with a 28% stake in SABMiller. Altria offers a rich 6.8% yield and is a steadily growing company. The date investors must own the stock to receive the next quarterly dividend is December 31.

Waste Management (WM) recently raised its dividend an impressive 8.6% to 3.8%. It owns 30% market share in waste disposal and 40% in landfill facilities. The must-own date for Waste Management is March 3. 3M (MMM) is a highly diversified company which invents and develops 29% of its products. Cramer called 3M "the perfect proxy for a rebound in the market." With 70% of 3M's revenues generated outside the U.S., the company is fairly immune to the domestic economy. While its 2.5% yield seems small, 3M has consistently raised its dividend, and Cramer predicts another hike in February.

3 Tipping Points

“This is a market where you pay a much higher price for being too negative than being too positive,” Cramer said, and described "tipping points" in the course of the year when it seemed everyone was saying "sell" but which turned out were the best times to buy. The market experienced historic declines from the beginning of the year until March, when Fed Chairman Ben Bernanke announced that no more big banks would be nationalized. This statement sparked a rally that continued almost unabated and saw the Dow climb to 10,000.

The rally in financials was "pretty much stopped in its tracks" as banks made equity offerings in May to raise capital. However, the rally continued in other sectors, thanks to the weak dollar and criticism of some of Obama's reforms, which threatened to cost businesses money. Industrials were particularly strong, and those who were worried about the action in financials and avoided stocks ended up losing.

Investors thought the long rally was finally ending as the Dow dropped from 10,000 to 9,600 and new money wasn't entering the market. However, good news prevailed; the GDP was solid, auto sales rose, housing bottomed and the tax credit for first-time homebuyers was extended. Tech companies announced impressive numbers and there was a rebirth of mergers and IPOs.

The final tipping point came in October when the Dow slipped from over 10,000 to 9,600. Given the huge run since March, and the fact that money from the sidelines wasn’t reentering the market, many people assumed the rally was over and sold their positions. Cramer said the valuable lesson of 2009 is that the scary "tipping points" were actually the best times to buy. He explained that no matter what critics say, this is a bull market, and when stocks sell off in a bull market, it is time to buy.


Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round and his Stop Trading! Picks.

Get Cramer's Picks by email-- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with Jim Cramer, CNBC or