Cramer's Stop Trading! Why the Housing News Is Good (12/23/09)

by: Miriam Metzinger

Stocks discussed on Jim Cramer's Stop Trading! TV Segment, Wednesday December 23.

Research in Motion (RIMM), Google (NASDAQ:GOOG), Bristol Myers Squibb (NYSE:BMY), Mead Johnson Nutrition (NYSE:MJN), WellPoint (WLP), Suburban Propane (NYSE:SPH)

Cramer took the "glass half full" view of housing data which showed an 11.3% decline in new home sales. Cramer says if prices remain low, homebuilders will stop building and create "equilibrium," as extra houses are sold off. An increase in sales would have meant more house building which would ruin the recovery thesis. He dismissed the idea that homebuilders will keep building regardless, because it is not worth it for them to produce more homes.

A Blackberry outage could create an opportunity for Google's (GOOG) Android. While Blackberry is a "well-loved product" and it is likely that customers will "cut RIM (RIMM) some slack," we are a nation of "impatient people," said Cramer.

Cramer said Bristol Myers Squibb's (BMY) decline in stock price was not due to earnings, but was an "adjustment" following its spinoff of Mead Johnson (MJN). Cramer likes BMY for its dividend, management and thinks pharma in general could do well as healthcare reform proves to be less aggressive than initially expected. Cramer also recommended Wellpoint (WLP) which he predicts could earn $6 a share in 2010 and is trading at a modest 12.7 times earnings compared to a historical rate of 16. If the multiple rises to 14, there will be a $24 gain.

Cramer thinks investors who are rolling over CDs from higher rates to present low rates are "making a very big mistake." All week on Mad Money, he has been recommending high dividend stocks as an alternative to owning CDs and treasurys. One high yielder is Suburban Propane (SPH).


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