Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday March 21.
The rally on Monday gave investors a rare second chance to sell all things tech. Names Cramer has liked for a while, Micron (MU), SanDisk (SNDK), Skyworks Solutions (SWKS), Ciena (CIEN), Finisar (FNSR), are not buys right now, since the cycle is not working their way. He calls these stocks "trading vehicles" unlike consumer staples, which work all year round. The only exception to this rule is Apple (AAPL) which no longer has a cycle, since consumers are going to buy its products regardless of the season.
With trading vehicles, it is perfectly alright, even advisable, to change one's mind. There is nothing heroic about hanging on. When Ciena's (CIEN) management said things were slowing down, and that the trend was not company-specific, that was the time to sit up, take notice and sell. Cramer said he is being unfairly criticized for changing his position in tech, but he was not responsible nor could have foreseen the inventory glut for tablets, the earthquake and the semiconductor slowdown. "Your first loss is your best loss," he advised viewers, and added that since he doesn't know when the tech cycle will improve, it is best to cut losses and use the rally as a selling opportunity.
Cramer took some calls:
American Tower (AMT): This is a well-run company with management committed to making AMT an international company, so Cramer would stick with the stock where it is but would not buy more.
Cypress Semiconductor (CY): Since Cypress makes touch screens for products other than Apple's, and since Apple is dominating tech, Cypress is not a buy right now.
Along with other bullish news on Monday was the announcement of Charles Schwab's (SCHW) takeover of optionsXpress (OXPS), a brokerage services company that brings "the greatest secular growth trend in the market, which is options," to the novice investor. Cramer praises optionsXpress for having been a "true moneymaker" and "a remarkable pro-shareholder engine." The stock has seen a 21% gain since January and a 29% rise since Cramer got behind the stock last September. David Fisher discussed the fact that stock had its IPO at $16, issued a special $4.50 dividend in December, and is being taken over at $18; "we've done pretty well for shareholders."
"We found a terrific partner in Schwab," continued Fisher, "and found a great opportunity to leverage our expertise, our technology and our passion for these products." Schwab's customer base of 7 million retail investors is a great opportunity for optionsXpress. Cramer asked if global turmoil is causing investors to sit on the sidelines, but Fisher responded the company empowers its customers to take advantage of trends and invest accordingly. Fisher said Schwab's stock has an advantage that it is levered to increases in interest rates and trading activity.
Now that Fisher has joined forces with Schwab, Cramer said he is going to miss him as CEO, "Every time you came on this show, you made us money."
The Dow soared 178 points on Monday following a week of doom and gloom. However, it won't be long before the bears will come rushing back in to drive down stocks. While the merger between AT&T (T) and T-Mobile (OTC:DTEGY) might seem like good news, there will likely be noise that the merger will be perceived as anti-competitive. However, the government cares mainly about increasing broadband and will likely let the merger go ahead. Cramer would also consider buying oil stocks, since not even demand in China can be tamped, and looks forward to the end of the obsession over radiation in Japan and constructive dialogue about rebuilding the country.
Cramer took some calls:
Citigroup (C): The bank sector is so hated, and the government wants to see banks make less money. Cramer likes Citigroup, but finds it difficult to recommend a bank in such a situation.
Anadarko (APC): On news a Korean company is going to buy a stake in Anadarko, Cramer reiterated his recommendation of American oil companies.
CEO Mark Papa: EOG Resources (EOG)
On news that a Korean company is paying for a huge stake in Anadarko, Cramer said investors should be on the look out for other domestic oil plays, like EOG Resources (EOG). This company was mainly a natural gas play that has expanded its oil segment; now 69% of the company's revenues are generated from oil and EOG wants to increase drilling by 53% this year and 30% next year. The company has significant exposure to the Bakken shale and Eagleford. EOG is a steal, and trades at a 10% discount to the competition.
Mark Papa said low production costs at just $30 a barrel has been a significant contributor to the company's success, with 20% of the oil hedged forward. Cramer says domestic oil drilling is "the best story never told," and would buy EOG as well as other U.S. drillers.
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