Cramer's Mad Money - The Cheapest Stock in the World (2/3/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday February 3.

CEO Interview: John Faraci, International Paper (NYSE:IP)

CEO John Faraci confessed disappointment with International Paper's (IP) performance this past quarter, but said the problems were specific and were related to issues with wood and the weather; "We left some pennies on the table," admitted Faraci. However, he insists the future looks bright for the company which has abundant cash on hand to the tune of $2.2 billion, which will be used to pay down the debt, expand capital, reinstate its dividend and invest in energy reduction projects.

Faraci reminded Cramer that International Paper's business is short-cycle and will benefit from the first signs of recovery. For instance, the company saw the first increase in its corrugated box sales in 18 months.

Cramer says International Paper is currently the cheapest stock in the world and is "ready to roll."

Time Warner (NYSE:TWX), NewsCorp (NASDAQ:NWSA), New York Times (NYSE:NYT), Ford (NYSE:F), Huntington Bancshares (NASDAQ:HBAN), Fifth Third Bancorp (NASDAQ:FITB), Gannett (NYSE:GCI), McClatchy (NYSE:MNI), Comcast (NASDAQ:CMCSA), Verizon (NYSE:VZ)

While doom and gloom was the main expectation for 2010, sectors that have been beaten down are showing strength and are buoyed by impressive earnings. While Cramer had been skeptical about the market's strength for 2010, he admitted, "When the facts change, I change my mind."

Media stocks, which were performing poorly in 2009, seem to be on the way back, led by Time Warner (TWX) and NewsCorp (NWSA) which reported outstanding earnings. Even the New York Times (NYT) seems to be rising from the dead. Gannett (GCI) and McClatchy (MNI) seem to have bottomed.

Cable companies were slowing down, but Comcast (CMCSA) delivered a great quarter and business at Verizon (NYSE:V) and DirecTV Group (DTV) is good.

Massive commercial loan defaults predicted by "experts" are nowhere in sight. Even housing in Florida, California and Nevada is looking brighter, and Cramer predicts the housing sector may be able to function freely without government aid by the end of the year. Critics of Cash for Clunkers predicted the program would steal car sales away from 2010, but Ford (F) is still going strong. Toyota Motor's (NYSE:TM) recall is also good news for Ford.

Regional banks such as Huntington Bancshares (HBAN) and Fifth Third Bancorp (FITB) are performing well and the entire healthcare sector is on fire. Even with a weakening China, the stock market is performing well.


Cramer dedicated a special edition of Sell Block to Seagate (STX), a disk maker which is showing signs of decline. Seagate ran high after March lows, but it looks like big money has been exiting the stock after it reported last week. The stock fell 9.2% on heavy trading volume. Cramer thinks analysts are too enthusiastic about Seagate, with 18 rating it a buy, 4 a hold and only one a sell. Even though Seagate is cheap and is trading at only a 5.4 multiple with an 11% growth rate, the chart looks sufficiently bad to encourage an exit from the stock. Cramer is also worried that the company has increased capital spending so much that it risks oversupply. He would shift out of Seagate and into Intel (INTC) which reported a strong quarter and has a 3.2% dividend.


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