Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday June 17.
As usual, the market was behaving illogically on Thursday. While unemployment is not improving and little progress is being made to remedy the BP (BP) oil spill, stocks went up instead of down with the Dow closing 25 points in the green and the S&P 500 up slightly. What is moving the markets? Cramer said the "pajama game" was responsible; traders who sit at home in their pajamas with their laptops and trade at a furious pace with the wrong information. Double and triple-leveraged ETFs only exacerbate the problem.
Cramer has spoken before about the problem of high frequency trading which now comprises 80% of trades compared to 30% 4 years ago. False information can make unsustainable rallies given the intensity of trades. For instance, traders started buying because the CurrencyShares Euro Trust (FXE) seemed strong, but the euro was stronger only because of bad news on the home front.
It doesn't help to be the voice of reason when trades are made in a flash. Unfortunately, for now at least, the fate of stocks “rests in their ludicrous hands," said Cramer.
Apple (AAPL) Is Still Taking Market Share: Adobe (ADBE), Exxon (XOM), Amazon (AMZN), Dell (DELL), Hewlett Packard (HPQ), Microsoft (MSFT), Nokia (NOK), Motorola (MOT), Palm (PALM), Google (GOOG)
With a $247 billion market cap, second only to Exxon (XOM), has Apple already seen its peak growth? Cramer insists that Apple's products will continue to take more market share. The iPhone and the iPad so far have added $129 billion to Apple's market cap, but Cramer thinks this only represents a portion of the $192 billion market share these two devices have taken from competitors. The iPad has been a blow to Adobe (ADBE) and Amazon's (AMZN) Kindle. It is expected to perform well against similar devices by competitors Dell (DELL) and Hewlett Packard (HPQ) and Microsoft (MSFT) has delayed plans for its own gadget.
Nokia (NOK) and Motorola (MOT) have surrendered a combined $96 billion of their market caps. The iPhone is growing at a 70-100% clip annually and continues to tower over Research in Motion (RIMM), Palm (PALM) and Google (GOOG) in the smart phone market. Motorola may lose another 50% of its cell phone business by the fourth quarter.
Apple is a giant but it is no Goliath, and it doesn't seem to have a reasonable rival ready to challenge it. Cramer thinks the stock could easily rise from $272 to $300 and is a resounding buy.
The bull run in shoes has been amazing to watch with Deckers (DECK), Skechers (SKX) and Steven Madden (SHOO) seeing triple digit rises in stock prices since the depth of the recession, and Nike (NKE) has approached a 100% increase in the same period. However, one shoe company is likely to be the Apple of the sector and has introduced a product that might be as big as Reebok (RBK) in the 80s.
Skechers, already famous for its "must-have" UGG boots, has also developed a toning sandal, and owns 50% of the business. The toning sandal has been reported to improve posture, promote weight loss, build muscle tone and lessen pressure on joints. Tone sandal wearers burn the same amount of calories in 20 minutes of walking it would usually take 30 minutes to burn.
Although these toning sandals are popular, many footwear lovers have yet to hear the news about them; the estimated market is $4.6 billion. The toning sandals has a kind of "halo effect" over Skechers' other products and generate interest in the company's other brands. While there is only one toning sandal brand, it makes up 10-15% of Skecher's business. With the footwear company announcing four new toning sandal brands, Skechers has more room to run and has strong fundamentals; it beat estimates last quarter by 12 cents and reported a 44% increase in revenues. In spite of its significant increase in stock price, the stock still trades at a multiple of 12 compared to a 15% growth rate. Cramer would run, not walk, to buy some Skechers.
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