Cramer's Mad Money - Right Rally, Wrong Stocks (4/19/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday April 19.

Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), Johnson & Johnson (NYSE:JNJ), Wal-Mart (NYSE:WMT), Procter & Gamble (NYSE:PG), Verizon (NYSE:VZ), AT&T (NYSE:T), Eli Lilly (NYSE:LLY)

With all the panic over the Goldman Sachs (GS) scandal over the weekend and the worry about its potential effect on stocks, the Dow rose 73 points and the S&P 500 was up half of a percentage. Cramer thinks the feeling on The Street is that the Goldman investigation has been "overdone." Cramer announced that the strategy now is to buy, particularly stocks like Citigroup (C) which are headed higher but got caught in the Goldman crossfire and faced unjustified and temporary declines.

Although Monday's rally was "right" it was in the "wrong stocks" for an economic upturn. Defensive instead of growth names led the indexes upward: Johnson & Johnson (JNJ), Wal-Mart (WMT), Procter & Gamble (PG), and dividend stocks Verizon (VZ) and AT&T (T). Drug stocks like Eli Lilly (LLY) and HMOs also rallied while tells on consumer spending gave up their gains from last week.

Another cause for concern is the "limbo stick" that has developed in the earnings season with company after company reporting stellar numbers; every number that follows has to be excellent or it might get hammered. However, Cramer would still take a glass-half-full approach.

"A rally is a rally," said Cramer, " in the end, we got one… regardless of the wrong stocks… regardless of the limbo stick… we are going to keep liking this market, unlike pretty much everybody else, until the earnings tell us not to… and that has not happened yet."

CEO Interview: Alan Shortall, Unilife (OTC:UNIFF)

Unilife (OTC:UNIFF) was a stock suggested by a Lightning Round caller. Cramer initially felt the stock was too speculative, but after doing a bit of homework, he decided to invite the CEO onto the show to speak for himself and on behalf of his company.

Unilife produces pre-filled and safety syringes; many of its products are proprietary. For example, the company owns the rights to a needle that has a fully automatic refraction feature. Unilife's products could virtually eliminate the spread of AIDS and hepatitis through contaminated needles. However the stock has been on a "rollercoaster" since it became public; the company's IPO was at $8.60, opened at $28 the following day and dropped to $5.41 six weeks later. Competition is rather fierce, and Cramer felt Unilife is particularly vulnerable to imitation. In addition, the company will need a lot of funding to open new plants and manufacture more products.

CEO Alan Shortall cited the 600,000 injuries caused by needles every year in U.S. healthcare facilities, and that most of the current products fail to meet the legal requirements for safety. Shortall demonstrated Unilife's proprietary needle which is impossible to use more than once and will prevent the spread of serious diseases and infections. When Cramer asked Shortall if he is worried about imitators, the CEO responded that Unilife has an exclusive deal with Sanofi Aventis which sells 40% of the pre-filled syringes in the world. When asked about the volatility of the share prices, Shortall explained the stock has increased 300% in the last year as more people realize "the unlimited potential" of the stock. Short-supply caused the stock price to rise so dramatically after its IPO, and since then, the stock's range has been $6 to $9.

Cramer called Unilife a "huge market opportunity."


Not all casino stocks are created equal, but they are treated by The Street as if they emerged from the same mold. MGM Mirage (MGM) reported a terrible quarter, in no small part because of the lackluster performance of its Las Vegas casinos. MGM dropped 6%, but Wynn (WYNN) was taken down along with it. Cramer called this a "classic buying opportunity," since Wynn is planning to release a major casino in Macau.

MGM's problems are either company specific or Vegas specific; MGM is 80% levered to Vegas and Wynn has only a 40% exposure to Vegas. While Vegas is losing, the Chinese are out and gambling, a trend fueled by the rise of the middle class and healthy tourism. In addition, Wynn has a "terrific" balance sheet. Steve Wynn says his new casino, The Encore, is "the most beautiful casino he has ever built." This news was obscured by the obsession over Goldman the past few days. In the last earnings report, management said business in Macau was booming and Cramer expects a few upgrades for Wynn on the success of the new casino.

The Brand Within: Ralph Lauren (NYSE:RL), JetBlue (NASDAQ:JBLU), Avon (NYSE:AVP), Under Armour (NYSE:UA), Disney (NYSE:DIS), JP Morgan (NYSE:JPM), First Solar (NASDAQ:FSLR), Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Intel (NASDAQ:INTC), Research in Motion (RIMM)

Cramer invited Daymond John, also know as "The Shark" onto the show. This fashion designer, businessman and author of The Brand Within discussed with Cramer the importance of creating a strong brand. Unfortunately, many CEOs feel they are too busy to develop their brand. However, branding is one of the most compelling reasons to buy a product. Daymond John said a company's entire mission statement can be summed up in a three word slogan, like White Castle's "What You Crave." Apple (AAPL) is the example of a quintessential brand that basically sells itself. Not many people are going to buy a product just because it is developed by Intel (INTC) or Research in Motion (RIMM); they will wait and see what others have to say about it first. But Apple, at this point, can sell about anything in a tick.

Cramer introduced the Daymond John Brand Loyalty Index, which consists of Ralph Lauren (RL), JetBlue (JBLU), Avon (AVP), Under Armour (UA), Disney (DIS), JP Morgan (JPM), First Solar (FSLR), Apple and Google (GOOG).


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