Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday March 23
10 Negative Stories That Might Not Be so Bad: Stocks Mentioned: Pulte (NYSE:PHM), DR Horton (NYSE:DHI), Caterpillar (NYSE:CAT), iPath Dow Jones Copper ETF (Pending:JJCC), Jabil Circuit (NYSE:JBL), Adobe (NASDAQ:ADBE), Ford (NYSE:F), LyondellBasell Industries(NYSE:LYB), Cirrus Networks (NASDAQ:CRUS), F-5 Networks (NASDAQ:FFIV)
In spite of the negative headlines, stocks went higher on Wednesday, with the Dow up 67 points. While there are plenty of legitimate worries, not all negative stories lack a silver lining. Cramer looked at 10 negative things affecting the market and found some good news among the bad.
2. Portuguese Debt Crisis. Cramer called this a "total sideshow."
3. Higher Oil Prices. This news is bad for consumers and many stocks, but great for domestic oil drillers.
4. Crisis in Japan. Tech has suffered in the wake of this crisis, but materials and industrials, particularly Caterpillar (CAT) will benefit greatly from the country's reconstruction.
5. Libya. Air strikes can only do so much and Gadaffi has gone into hiding. Cramer conceded there isn't much good about this situation.
6. Commodity Prices Rising. This is good news for the iPath Dow Jones Copper ETF (JJCC), which is a tell on industrial growth, particularly in Japan.
7. The Weak Dollar. This can be good for many businesses with overseas exposure, but a dollar that is too low can counteract the good news about copper.
8. Bad Action in the Banks. It is not a well-kept secret that the government is keeping banks from being profitable. This trend can only be remedied by a dramatic improvement in employment.
9. Tech results are mixed. Cramer says he is on the fence about tech. Jabil Circuit (JBL) reported a great quarter and zoomed 11%, but Adobe (ADBE), which is levered to Japan, fell 3.7%; "Tech is a push here."
10. Autos are dreadful. The sector was in the doldrums before Japan's earthquake and now it is in the doghouse. Cramer likes Ford (F) as a long-term play, but when things are this bad for a sector, "Who cares about long-term?"
Cramer took a few calls:
LyondellBasell Industries(LYB): The stock has risen from $20 to $40, and Cramer thinks it is time to take profits.
AT&T (NYSE:T), T-Mobile (OTCQX:DTEGY)
Cramer thinks the merger between AT&T (T) and T-Mobile is "brilliant" and T's past problem of dropped calls can be solved by T-Mobile's technology. How is the merger, which seems highly uncompetitive, going to be acceptable to the Justice Department? First, the combined companies can provide 95% of the country with broadband. One of President Obama's main goals is to extend broadband to poorer, isolated areas of the country. Second, the combined companies are going to allow their workers to participate in the general Communications Workers Union. Since the merger is good for labor unions and the poor, regulators, particularly given the views of the current administration, are likely to overlook the effect it has on consumers and the competition.
CEO Matt Desh, Iridium (NASDAQ:IRDM)
Iridium (IRDM) is literally a high-flying stock, since it is a satellite play with 66 low Earth orbit satelites, and has the capability to provide voice and data services to 100% of the Earth's surface. Iridium trades at a cheap multiple of 10 times earnings with an 11% growth rate. The satellite phone business has just two players, and Cramer thinks Iridium is the stronger part of the duopoly with better products and better government contracts. There is a huge short position on the stock, mainly because of worries about the company's costly replacement of satellites. The stock sold off after its quarter, but is up 9% from where Cramer recommended it last month.
CEO Matt Desch talked about Iridium's goal of "riding the wave of wireless connectivity to parts of the world where connectivity doesn't exist." The recent disasters show how crucial Iridium is; warning devices in Japan's tsunami were Iridium based, and with networks down, the only way to track down survivors was with satellite phones.
While the company has to replace expensive satellites, half of the project is financed and the other half is going to be paid for by the company. In the past five years the company has grown 25% and Desch says it looks forward for continued growth, especially since new satellites will not be needed for another 15 years after this replacement cycle is completed.
"Wait for it to come in," said Cramer. "It is a long-term situation, but you know I like it."
It looks as if energy and materials will be the next sectors in fashion, and tech and banks are out of style. These are not mere fads, but when oil and energy are in favor, they stay in fashion for a long time. Technical analyst John Roche looked at the trends of the two sectors rising together, and thinks that money managers will want to be overweight energy and materials. He looked at charts of Apache (APA) and EOG Resources (EOG) and found that both stocks have been trading sideways and are building a base. Once these stocks break through their bases, Apache can rise 20% to $150 and EOG could go from $114 to $145. Cramer thinks the fundamentals support this view, especially with renewed demand for energy and materials in the wake of the Japanese disaster.
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