Cramer's Mad Money - Why It's Not Too Late to Buy Apple (5/2/11)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday May 2.

Apple (NASDAQ:AAPL), Nokia (NYSE:NOK), Research in Motion (RIMM), Silicon Graphics (NASDAQ:SGI), Ultratech (NASDAQ:UTEK), RF Micro Devices (RFMD), Skyworks Solutions (NASDAQ:SWKS)

Even with a $348 price tag, it's not too late to buy Apple (AAPL) which Cramer thinks could go to $400, at the very least. The fact that the stock hasn't risen much lately has investors confused, but Cramer urged viewers not to be put off by the company's high stock price, which is headed even higher. Tech is not a sector in which a rising tide raises all boats. The rising tide is raising Apple's boat, but is sinking the competition, such as Research in Motion (RIMM) and Nokia (NOK). Research in Motion (RIMM) blamed its 9% cut in guidance on a "wait and see" attitude from its distributors; the company could not admit that it can't compete with Apple. Nokia's (NOK) market share for smartphones has declined from 42% to 26%; "Apple is eating Nokia's lunch." Nokia is having to eliminate 7,000 jobs to cut costs, while Apple keeps growing, and Research in Motion's corporate sector is threatened as 88% of Fortune 500 companies are deploying or testing the iPhone and 74% are deploying the iPad.

Apple's quarter was a thing of beauty, with 82% revenue growth and 94% profit growth. Sales for the iPhone were up 113% since last year, the company is selling iPads faster than they can be produced and sales of computers were up 28%. Apple still trades at a multiple of 12, about the same as Nokia's multiple. Bad news for Nokia and Research in Motion is good news for Apple. "It is not too late to buy Apple."

Cramer took some calls:

Silicon Graphics (SGI) has had a big run. Cramer would take some profits to avoid being greedy.

Ultratech (UTEK): Cramer doesn't like the industry.

RF Micro Devices (RFMD): Cramer would stay away from RFMD but would buy Skyworks (SWKS) instead, even though it is up 9%.

CEO Interview: David Crane, NRG Energy (NYSE:NRG)

NRG Energy (NRG) is a forward-thinking diversified power generator. The utility has exposure to coal, nuclear power and is beginning an ambitious electrical vehicle ecosystem in Texas, including charging stations for electric cars. The company has invested $3 million in research for solar and wind energy. When NRG announced its plans to build a nuclear plant were being scrapped, the stock soared. NRG is up 21% from where Cramer recommended it at $19 a few months ago, and he thinks the stock is undervalued.

With nuclear energy less popular than it was before the disaster in Japan, solar seems to be taking its place and is on its way to becoming economical, said CEO David Crane. NRG plans to be "the first mover" in the solar space, and Crane discussed new technologies that are making solar economically viable. Demand will be created as states increase their regulations calling for an increase in energy from renewable sources; California's target is 33% renewable energy by 2025. When asked about the electric vehicle recharging stations, Crane said there are only a few electric cars on the road but "we could be at the start of something big."

"NRG was always undervalued," Cramer said. "Maybe the true value is starting to come out."

4 Reasons Osama Bin Laden's Death Is Good for the Market: 3M (NYSE:MMM), Amazon (NASDAQ:AMZN), United Technologies (NYSE:UTX), SPDR Gold Trust ETF (NYSEARCA:GLD), Dupont (NYSE:DD), Monsanto (NYSE:MON), Deere (NYSE:DE), Enterprise Partners (NYSE:EPD)

Cramer outlined four ways Osama Bin Laden's death will positively impact the market:

1. Consumer Confidence: No matter what the catalyst, when Americans feel good about something, they go to the mall.

2. Exit from Afghanistan: Bin Laden's demise might give the U.S. a reason to leave Afghanistan. While not as much a quagmire as the war in Vietnam, the ongoing conflict in Afghanistan has been a huge drain on the already strained U.S. economy. Cramer reminded viewers that it was the war in Afghanistan that brought down the Soviet economy in the 80s.

3. Is Gadaffi Next? Now that the U.S. has taken out Bin Laden, Gadaffi is probably running for cover.

4. Investor confidence: Not only do Americans go to the mall when they feel good, they buy stocks on good news, because they feel better about the economy.

Fears of retaliation brought oil prices up, but great stocks were also breaking out of key ranges: 3M (MMM) broke out of its 80s range, Amazon (AMZN) has seen its way past the 170-180 trap, United Technologies (UTX) emerged from the quicksand. China's slowing might actually be good news for the U.S., because it means the Chinese government might stop raising interest rates. The impact of Osama Bin Laden's killing might not yet be visible on the market level, but it is sometimes hard to quantify consumer confidence. However, when an event makes Americans euphoric, there is always a market reaction, said Cramer. The buying of stocks on Monday was "too muted," and the positive effects might be felt in the near future.

Cramer took some calls:

He told one viewer not to assume mining stocks are going to reflect the price of gold, giving rising finding costs and mining expenses. Cramer explained it is for this reason his first choices for investing in gold are bullion and the Goldshares ETF (GLD), and only after these would he buy gold stocks.

Agriculture is hot, and DuPont (DD) might seem to be a buy, but it is not a pure agriculture play. Monsanto (MON) has patent problems, so Cramer would buy Deere (DE), which should go much higher.

Pipeline companies like Enterprise Partners (EPD) are pulling back as Washington discusses raising taxes for these companies. Cramer doubts taxes will be hiked, but he expects weakness in the sector for a few days.

Mad Mail: Webcom (WWWW), Swisher Hygiene (NASDAQ:SWSH), Cliffs Natural Resources (NYSE:CLF), Globe Specialty Metals (NASDAQ:GSM), Walter Industries (NYSE:WLT), Oclaro (NASDAQ:OCLR)

Webcom (WWWW) is a one-stop shop for website design and ecommerce and could be an intriguing spec, but it has rallied 85% since last year and has a multiple of 15 and only a 12% growth rate. Cramer would only buy it at a pullback.

Swisher Hygiene (SWSH): This full-service cleaning solutions provider has a strong management, but the stock is too speculative and risky, especially since it sells at 20 times sales, which is "insanely expensive...I wouldn't touch it with a ten foot plunger."

Cliffs Natural Resources (CLF) is a buy, since it has been down because the Chinese are raising interest rates. Cramer also likes Walter Industries (WLT).

Globe Specialty Metals (GSM) is not a buy ahead of its quarter. He would wait for it to drop more.

Oclaro (OCLR) is too difficult to own because it is in the optical space, which doesn't look like it is recovering any time soon.


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