Cramer's Mad Money - Stop Worrying and Love the Bull (4/6/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday April 6.

We Fret Too Much: Genworth Financial (NYSE:GNW), Lincoln National (NYSE:LNC), Principal Financial (NYSE:PFG), Hartford Financial (NYSE:HIG), MetLife (NYSE:MET), Cree (NASDAQ:CREE), Regions Financial (NYSE:RF) Huntington Bancshares (NASDAQ:HBAN), Marshall & Ilsley Corporation (NYSE:MI), Comerica (NYSE:CMA), Fifth Third Bancorp (NASDAQ:FITB), Zions Bancorp (NASDAQ:ZION), Symetra Financial (NYSE:SYA), Federal Realty Investment Trust (NYSE:FRT), Vornado Realty Trust (NYSE:VNO), Simon Property Group Inc. (NYSE:SPG), Brandywine Realty Trust (NYSE:BDN), Freeport-McMoRan (NYSE:FCX), Vale (NYSE:VALE), BHP Billiton (NYSE:BHP), Walter Energy Inc. (NYSE:WLT), Apple (NASDAQ:AAPL), Hewlett-Packard (NYSE:HPQ), Western Digital (NYSE:WDC), Intel (NASDAQ:INTC)

Tuesday was pretty quiet with the Dow falling 3 points and the S&P 500 inching up, but Cramer thinks things could have been much better if it weren't for investors' collective worrying. "We fret too much," explained Cramer, whether it is about the iPad release, Treasury auctions, Fed announcements, the impending collapse of commercial real estate and China's bubble. Of course earnings is always a cause of angst. While some worry is justified and caution is a virtue, "Ever since the bottom (March 2009) every action that's been motivated by fretting has been just plain wrong."

For instance, a year ago, people assumed insurers were "dead meat." Cramer worried about Genworth Financial (GNW) when "I should have been buying it hand over fist." While the recovery of insurers aren't as intense as their declines during the crash, the performance of Lincoln National (LNC), Principal Financial (PFG), Hartford Financial (HIG) and MetLife (MET) have nonetheless been "remarkable."

Cree (CREE) was up 7 points on Tuesday after having been kept down on worries about consumer spending. Cramer says Regions Financial (RF) Huntington Bank (HBAN), Marshall & Ilsley Corporation (MI), Comerica (CMA), Fifth Third Bancorp (FITB), Zions Bancorp (ZION), Symetra Financial (SYA) "keep levitating" although they are still well below the levels they were when it worry was justified. "Now is the time to buy them," said Cramer.

He added a "shocker" prediction that the government is going to have to dramatically lower the budget deficit projections. "Is anyone saying this besides moi?"

Not long ago, Federal Realty Investment Trust (FRT), Vornado Realty Trust (VNO), and Simon Property Group Inc. (SPG), to the little hotel REITs, and Brandywine Realty Trust (BDN) "were being smashed down, totally spindled and mutilated... by fear" of a commercial real estate collapse. Now nothing will stop these stocks "from powering higher," said Cramer.

What about healthcare reform worries? Stocks in the sector are healthy, even companies that make expensive medical equipment. What about the fear of the Chinese bubble burst and the disaster projected for materials and industrial stocks? Freeport-McMoRan (FCX), Vale (VALE), BHP Billiton (BHP) and Walter Energy Inc. (WLT) are up.

In the old days, worried hedge fund managers would cut back positions. Now they take action and short frenetically. Cramer notes the large short positions in Apple (AAPL), Hewlett-Packard (HPQ), Western Digital (WDC) and Intel (INTC). Cramer thinks these shorts should just stay on the sidelines rather than spoiling the game for everyone else. Quoting Dr. Strangelove, Cramer said, "It is time to stop worrying and love the bull."

Boeing (NYSE:BA), Triumph (NYSE:TGI)

Cramer is excited about aerospace, which, thanks to the release of Boeing's (BA) Dreamliner, will be in a multi-year bull market. He also thinks it is a good sign when, on news of an acquisition, the acquirer's stock price rises instead of declines. Triumph (TGI), an aerospace structures and systems supplier, rose 10% on its announcement that it would buy Vought for $1.44 billion. "The market adores this deal," said Cramer, who thinks aerospace stocks may see gains for as long as 7 years on the fresh aerospace cycle.

"However, Triumph has gained 62% over last year. Is it too high to buy? Cramer took a look at the technicals and the fundamentals before formulating his thesis. He discussed the technical analysis of Dan Fitzpatrick of First he discussed the Bollinger Bands, which measure the range of a stock. Triumph went above the Bollinger Band, which is not a good sign, since the Bands contain about 90% of the stock's action. Also, Triumph saw a intraday reversal, which technically is a "kiss of death."

Dan Fitzpatrick thinks Triumph can be bought on a pullback to $59 or maybe in the low $60s. But Cramer says this level isn't realistic, because Triumph has not been at such a low level since before the acquisition was announced. Cramer says in this case, the fundamentals trump the technicals. He acknowledged the play wasn't perfect, but thinks it is worth buying Triumph at its current level to take advantage of the huge upside potential of a fresh multi-year aerospace cycle.

California Housing: KB Home (NYSE:KBH), Lennar (NYSE:LEN), Standard Pacific (SPF)

California was one of the hardest hit areas of the country during the downturn, but now the population is increasing as are housing inventories. Cramer doesn't think homebuilders would be building unless they could sell homes, so he takes the increase in building as a bullish sign. To play this trend, Cramer looked at KB Home (KBH) which has 38% of its homes in California and Lennar with a Californian exposure of 25%. However, Cramer thinks the best and most speculative play is Standard Pacific (SPF) which has 56% exposure to California.

Standard Pacific is up 373% over last year but still trades below $5. It also has exposure to Florida and Arizona, states that suffered terribly during the housing downturn, and the company needed intense asset infusion from private equity to stay afloat. However, the company's gross margins are up 20% this year compared to 13% in 2008, prices are increasing 5% and sales are up 10%. Standard Pacific is buying up large tracts of cheap land and is on the move up. However, analysts still don't love the stock with only two of seven rating the stock a "buy," three "holds" and two "sells." However, Cramer thinks investors should get ahead of the analysts' change of heart because "the rebound is for real."

CEO Interview: Irwin Simon, Hain Celestial (NASDAQ:HAIN), Kraft (KFT)

A few months ago, Cramer thought Hain Celestial (HAIN) was a better takeover target for Kraft (KFT) than Cadbury, given the growing health consciousness of the average consumer. However, Hain (HAIN) had not budged and is losing distribution. While Hain is struggling to recoup its losses through direct sales, it has to catch up fast to avoid losses. With great products and a strong trend toward health, Cramer asked Irwin Simon, CEO of Hain, why his company is not participating in the upward trend of health food companies.

Irwin Simon said the analysts were overly negative on Hain, which saw a 35% increase in gap earnings last quarter and a 5-6% increase in sales, not taking into account the business lost from U.K distributors. "Eating healthy is not a fad, it's a trend," said Irwin Simon, and Hain Celestial is the name people go to when they want all-natural, organic and chemical-free products. While he acknowledged the company suffered as consumers traded down during the recession, as the economy improves, Simon expressed confidence that the consumer would go back to making healthy food a top priority.

Cramer said Simon made a good case for Hain and is a believer.


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