Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday March 12
Let's Hear From the Bad Guys: Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JP Morgan (NYSE:JPM), AIG (NYSE:AIG), Fannie Mae (FNM), Washington Mutual (OTC:WAMQ), Wachovia (NYSE:WFC), Countrywide Financial (NYSE:BAC)
Cramer says he's tired of seeing Vikram Pandit, CEO of Citigroup (C), Jamie Dimon of JP Morgan (JPM) and Lloyd Blankfein of Goldman Sachs (GS), interrogated and criticized mercilessly when they are the ones trying to bring their companies back to their feet. Instead, Cramer said he would subpoena the guys who oversaw the demise of their own institutions and probably profited from their downfall.
Cramer said he would subpoena those who held the reins at Lehman Brothers, Bear Stearns, AIG (AIG), Wachovia, Fannie Mae (FNM), Washington Mutual (OTC:WAMQ) and CountryWide at the time of their demise to find out what exactly they were up to and how they benefited.
"I like a good show trial as much as the next guy… but only if it is the villains getting tried.. not the innocent," said Cramer.
Game Plan: Ford (NYSE:F), Ford Preferred (F-PS), Sequenom (NASDAQ:SQNM), DSW (NYSE:DSW), Skechers (NYSE:SKX), Deckers (NASDAQ:DECK), Jones New York (NYSE:JNY), AAR (NYSE:AIR), Boeing (NYSE:BA), Discover (NYSE:DFS), Nike (NYSE:NKE), FedEx (NYSE:FDX), Palm (PALM), Apple (NASDAQ:AAPL)
Cramer thinks the Fed meeting on Tuesday will give the bears an excuse to sell, even if the Fed doesn't discuss raising interest rates in the near future. If the market is taken down after Tuesday's Fed meeting, Cramer would use the decline as an opportunity to buy quality stocks. On Tuesday, the Housing Starts number will also be announced, and Cramer is hoping this will be low because of the oversupply of homes in the U.S. However, given the harsh winter, it is unlikely this number will be high.
Monday's Industrial Production number should be worth paying attention to, and Cramer predicts it will be strong thanks to increased auto production from Ford (F) (Cramer prefers to buy the Ford Preferred (F-PS) Shares.) On Monday, Sequenom (NYSE:SQM) is reporting. Its stock price has nearly doubled and Cantor Fitzegerald raised its target prices to $16 from its current $7.89. Cramer suspects some fuzzy math, but would keep an eye on the earnings call.
Discount Shoe Warehouse (DSW) reports on Tuesday, and the company will be a gauge for other shoe plays: Deckers (DECK), Skechers (SKX) and apparel company Jones New York (JNY). AAR's (AIR) report will be a good indication for Boeing (BA), a stock Cramer predicts will reach $100. On Tuesday Cramer would listen to what Discover (DFS) has to say about the decline in credit losses and the effect of the proposed Card Act. While good news from Discover might bring up the banks, they might drop again depending on what the Fed says Tuesday.
Nike (NKE) reports on Wednesday, and Cramer says if it surpasses $4.6 billion in sales, 94 cents a share in earnings and has positive futures orders, the stock may head to the mid $70s.
Sunstone Hotel Investors (NYSE:SHO)
What can turn an ugly duckling of a stock into a beautiful swan? When a CFO buys stock. While CEOs buy back shares of their own companies for all kinds of reasons, when a CFO buys, it is as if he is saying, "I know, we've been shaky. But it isn't any longer. And I'm putting my money where my financials are..." Sunstone Hotel Investors (SHO) has been a failed REIT until now. At the peak of the recession, many of its hotels had stopped paying mortgages, but since then, the company has restructured its debt. Of the 15 analysts who cover the stock, only one rates it a "buy" compared to 12 "holds" and 2 "sells." The CFO recently bought back $52,156 worth of shares which may well be a vote of confidence in this speculative REIT play.
Del Monte's 13 cent earnings beat off of a 21 cent base was a tell for the bull market in pet products, since 46% of Del Monte's sales come from pet food. Even in a recession, people do not skimp on their pets, and it is estimated that 62% of Americans have at least one furry or feathered friend at home. Skipping Del Monte, Cramer is looking for a pure play on pets with Petsmart (PETM) or PetMed Express (PETS). Petsmart is a "one stop shop" for all things for pets, including food, equipment, healthcare and even grooming, training and boarding. The company beat earnings estimates by 6 cents a share, its same store sales were up and inventories were down. While the stock is flirting with its 52 week high, Cramer thinks sales are rising enough and its multiple is low enough at 15 to justify buying at the current level.
PetMed Express is the Amazon.com of the pet world and sells medicine for pets at a 10-15% discount. Market share for all online pet pharmacies is expected to increase anywhere from 11-20% in the next few years, and since PetMed is the largest of them, it is likely to reap the greatest benefit. While this stock is also close to its 52 week high, it has a 15% growth rate compared to a multiple of 16.
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