Cramer's Mad Money - The Biggest First Quarter for Tech in a Decade (12/23/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday December 23.

The Biggest First Quarter for Tech in a Decade: EMC (EMC), Micron Technology (NASDAQ:MU), Microsoft (NASDAQ:MSFT), Jabil Circuit (NYSE:JBL), Cisco (NASDAQ:CSCO), Nokia (NYSE:NOK), Motorola (MOT), Arrow Electronics (NYSE:ARW), Avnet (NYSE:AVT), On Semi (ONNN), STMicroelectronics (NYSE:STM), Texas Instruments (NYSE:TXN), Sandisk (SNDK), MicroChip Technology (NASDAQ:MCHP), National Semiconductor (NSM), Xlinx (NASDAQ:XLNX), Altera (NASDAQ:ALTR)

Even though the first quarter is historically weak for the tech sector, Cramer gave ten reasons why 2010 will be different:

1. There is a supply shortage of DRAM, a kind of memory used in computers and other devices.

2. EMC's (EMC) performance improved in Q4, setting the stage for continued strength in the new year.

3. Micron Technology (MU) is finally profitable after three slow years thanks to increased demand for memory and servers. Mircosoft's (MSFT) Windows 7 release has been good news for Micron.

4. Jabil Circuit (JBL) reported strong numbers and raised guidance three times its previous levels. Jabil's results are a tell on tech in general, since its clients include Cisco (CSCO), Nokia (NOK) and Motorola (MOT).

5. Arrow Electronics (ARW) with 800 suppliers and 130,000 customers, is also a tell on tech; Arrow announced that demand for semiconductors is increasing.

6. Avnet (AVT), which has 100,000 customers predicting accelerating growth in the first quarter.

7. ON Semiconductor (ONNN) CEO Keith Jackson says demand is increasing for autos, video games and cell phones.

8. Infineon is seeing its industrial and auto pace picking up, and its rivals STMicroelectronics (STM) and Texas Instruments (TXN) are seeing an even greater increase.

9. While the price for memory chips should be decreasing, Sandisk's (SNDK) customers Samsung, Hynix and Toshiba are functioning at full capacity because of a lack of supply.

10. MicroChip Technology (MCHP), National Semiconductor (NSM), Xlinx (XLNX), Altera (ALTR) and Texas Instruments (TXN) are all seeing strong sales.

After giving ten reasons to buy tech, Cramer says selling any tech stock is "just plain nuts."

Dividend Stocks: Emerson Electric (NYSE:EMR), Nucor (NYSE:NUE), Coca Cola (NYSE:KO)

Cramer continued his series on dividend stocks, and discussed Emerson Electric (EMR) which yields 3.1% and has raised its dividend for 53 consecutive years. Emerson Electric is a diversified industrial company that makes motors for tools and appliances as well as energy saving devices. Since 75% of its business is international, Emerson was spared the worst of the recession and cut costs to stay competitive. Cramer thinks Emerson is a good stock to own when the economy recovers.

Cramer is a fan of Nucor (NUE) CEO Dan DiMicco who has raised the dividend to 3.2%, and may bring back the special dividends that were put on hold during the recession. Cramer thinks these special dividends could return 2010, but the deadline to receive the current dividend is December 28. Cramer notes that Nucor has done well even without stimulus help from the government and should continue to perform.

Not only is Coca-Cola (KO) a good international, weak-dollar play and a classic company, but it has raised its dividend, which is currently at 2.9%, for 47 consecutive years.

“You want income?” Cramer asked viewers. “Forget bond funds, forget CDs, and buy some of these great dividend raisers.”

Good News for Housing: Home Depot (NYSE:HD), Lowes (NYSE:LOW), Whirlpool (NYSE:WHR), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC)

Cramer once again pointed out how bearish headlines can lead investors to miss major moves. The press has a vested interest in being negative, because bad news is often more interesting than good, and reporters are more worried about being wrong on the bullish extreme than the bearish. However, placing too much credence in the media can throw investors off.

For example, the press was bearish on housing because of the drop in new home sales. However, homebuilders will build fewer homes because prices are too cheap. This sets up a scenario for higher home prices down the road. Cramer would go ahead and buy housing-related stocks Home Depot (HD), Lowe's (LOW), Whirlpool (WHR), Bank of America (BAC) and Wells Fargo (WFC) ahead of his predicted rise in housing prices.


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