Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday September 20.
The New Happy Warrior
What caused the Dow to move up 146 points? During Obama's speech on Monday, he had ample opportunity to attack business and Wall Street, but refused to take the bait. While The Street used to tremble at the prospect of an Obama speech, the President has become the "new happy warrior" and an apparent friend, rather than a foe, to business. Obama shows a new willingness to compromise on his reforms, and is prepared to take measures to reduce middle class taxes, create jobs and stimulate the economy. While in absence of a friend in the government, gridlock is good, Cramer said, "Mark my words. It is much better to have a president who is actually bullish for the market, than to have gridlock."
Last year, Cramer focused on homeland security stocks, ranging from counterterrorism to companies that protect information technology sectors. Since then, the entire sector has been hot and there have been many takeovers in the space. On the search for new takeover targets and winners in the sector, Cramer looked at Fortinet (FTNT), Verint (NASDAQ:VRNT), Radware (RDWR). All of these stocks have climbed, and he would suggest waiting for a pullback before buying them. Fortinet produces one platform that gives customers an entire security package: antivirus, firewall, anti-spam, to traffic optimization and data loss prevention.
Verint produces software used by security companies, law enforcement and terrorist agencies. The company reported a blowout quarter on September 8th and beat estimates by 19 cents. Verint raised its revenue and margin forecast for 2011.
Radware (RDWR) is an applications delivery company that ensures software applications work efficiently. The company improves security of IT networks and reported a strong quarter in July with a 30% increase in revenues and "enormous" gross margin.
While Cramer would hold off on buying the three above-mentioned stocks, he would buy Nice Systems (NICE) now on a 3% decline. He thinks it is "insane" that Nice has gone down, especially since it has exposure to both physical and network security. The stock is currently a $29 stock with $9.37 in cash, and trades at 10.6 times next year's earnings.
Interview with Dan Fitzpatrick
While Cramer is committed to looking at fundamentals, he admits there is a lot to be learned from the charts, especially in the current trading environment. Charts are not all hocus-pocus, nor are they for knee jerk reactions. Dan Fitzpatrick, technical analyst at TheStreet.com, discussed what charts are and are not supposed to do. "Charts aren't predictive," explained Fitzpatrick, "I mean, you can use them for that but everybody's a genius 50% of the time when you guess. They're really more informative than anything else."
While patterns might be indicative of what is going to happen to a stock, they should not be considered as prophecy; "Spotting a pattern doesn't mean that it's going to be complete and it doesn't entitle you to make money either."
One major problem with stocks these days is the knee jerk reaction many short-sellers have to the charts:
Short sellers just look at the charts without analyzing. Exactly, all they're doing is just looking at the pictures rather than using it as a complete analysis. You want to be a market psychologist when you're looking at the charts.
Mad Mail: Chevron (NYSE:CVX), Oracle (NASDAQ:ORCL), JDS Uniphase (JDSU), Apple (NASDAQ:AAPL), Chesapeake Energy (NYSE:CHK), Sun Microsystems (JAVA), Hewlett Packard (NYSE:HPQ), ConocoPhillips (NYSE:COP), Cree (NASDAQ:CREE), BP (NYSE:BP)
When asked about Chevron's (CVX) lawsuit in Ecuador, Cramer said he would be careful about being too negative about a company that has not underperformed. He would "not fret" about the case. Concerning Oracle (ORCL), Cramer said the Sun Microsystems (JAVA) acquisition seems to be good and people seem to like the fact that former Hewlett Packard (HPQ) CEO Mark Hurd is on board. Cramer says there is no reason to sell Oracle, but he would revisit it at $30.
When a viewer asked about JDS Uniphase (JDSU) Cramer said the stock was disappointing and prefers Apple (AAPL). The only natural gas stock he is recommending is Chesapeake (CHK). When asked when BP (BP) will reinstate its dividend, Cramer predicted by next year, but until then, why not buy some ConocoPhillips (COP). While he thinks Cree (CREE) will be higher a year from now, Cramer can't guarantee it is going up sooner than that.
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