Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday March 24.
The Ten Plagues of Healthcare, Caterpillar (NYSE:CAT)
Cramer apologized to viewers for being overly pessimistic about the passage of the healthcare reform; "I've got a bone to pick, with myself. I screwed up, and now it's time to self-flagellate with the Cat of Nine Tails... in order to make it right." Vowing to don a hairshirt, Cramer expressed contrition for predicting a severe selloff of several days when the only negative fallout from Sunday's decision was that investors missed a 20 minute decline immediately after Monday's opening during which they could have bought stocks.
Cramer made a list of the "10 Plagues" he was fearing in the wake of the healthcare bill's passage.
1. Impact on earnings. Cramer believed Caterpillar (CAT) when its management said the healthcare bill would severely impact earnings, but the stock is down just two points. Go figure.
2. Panic Selling. Cramer thought panic selling from money managers would descend like a plague of locusts. Instead, Big Money just seems relieved the whole thing is over, at least for now.
3. Taxes. Healthcare reform will come with tax increases, and Cramer expected a huge selloff in anticipation of this. However, with new taxes not coming until next year and the bulk of them in 2013, stocks are still playing for time.
4. Obama's "anti-shareholder pro-labor agenda." Cramer thought the President would be so empowered by the passage of healthcare reform, he would unleash a plague of boils on the stock market and on business. Obama now seems sufficiently busy with hammering out details that he doesn't have time to attack anything else.
5. Budget Deficit. The expense of healthcare reform seemed like bad news for an already yawning budget deficit, but apparently, either the impact is not going to be huge or investors are in denial.
6. Buying Opportunity. With the upcoming earnings season expected to be strong, Cramer was looking for an opportunity to buy stocks cheap, and was therefore anticipating a selloff lasting several days.
7. The Power of Washington. Cramer feared Washington would "trump everything," but it turns out the government is not necessarily at the top of investors' minds.
8. Fear of Greed. "I didn't want to be greedy," explained Cramer. "I got it wrong, because I thought the market had gone up so much that it was due for a pause."
9. Small Business. The healthcare bill was expected to be bad for small business and employment, but Cramer says the economy seems to be recovering on its own, and reform may not have such a huge impact.
10. Power of the Headlines. Cramer admitted he overestimated the power of the news on the stock market this time. In the end, fundamentals win out, he concluded.
Radio Lives! Entercom Communications (NYSE:ETM)
If video threatened to kill the radio star, political campaigning has kept the medium alive and well. The Supreme Court's decision last year that the government could not ban campaign contributions by corporations is good news for radio, which is going to be a major beneficiary of political ad spending ahead of elections this November. In addition, rates, which traditionally fall in January, stayed firm.
Entercom Communications (ETM) is the only "pure play publicly-traded radio company that is large enough to talk about," Cramer said. With most other radio companies going bankrupt or getting swallowed up, Entercom is a "last man standing" play. A full 77% of adults listen to radio daily, and spending on radio advertising is increasing; Entercom has seen a 7% rise in ad sales since last year.
Far from being cannibalized by the internet, Entercom is using the internet to its advantage with streaming audio and numerous websites. In its last earnings report, the company announced a 50% increase in digital revenues over last year, and ETM has trimmed its debt and raised cash. It may seem crazy to buy a stock that is up 855% from a year ago, but Cramer reminded viewers that radio was left for dead last year. Entercom traded at $30 in 2007 compared to its $11 level now. Cramer thinks the stock could run up as much as 50%, but he would wait for a pullback before buying.
Cramer began Mad Mail with an update on three "smoking" IPOs. Cramer would take profits in MaxLinear (MXL) which is up 28% from its $14 opening; "This one is now too hot to chase." Calix Networks (CALX) opened at $13, and rose 31% to $17 before retreating to $15.10. Cramer wouldn't chase Calix, but would wait for a pullback to buy. His target for Calix is $18. Cramer thinks First Interstate BancSystem is still attractive at $15.70.
Cramer says STEC (STEC) is a poorly-run company and he wouldn't own it. Even though there has been talk that Weatherford International (WFT), which has large exposure to Iraqi oil, might fall foul of the Foreign Corrupt Practices Act, Cramer would still buy it aggressively at $17.
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