Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday August 10.
Cramer agrees with JPMorgan CEO Jamie Dimon's optimism about the long-term market. The real greatness, said Cramer, is in the success of multi-national corporations like Eaton (ETN), Pepsi (PEP) and Dupont (DD) that are scouring the Earth for new opportunities. When the economy is rough, it is easy to forget about strong fundamentals from individual companies. The recent exodus from stocks is the largest since the bottom in 2009, and those who bought that bottom saw huge profits when the economy recovered. Cramer urged viewers to share Dimon's optimism and to buy good stocks on declines.
Baidu (BIDU) is the only Chinese stock Cramer trusts, because he thinks the Chinese stock market is not reliable. Baidu reported an "unbelievable quarter" and Google (GOOG) has "ceded China to Baidu." Cramer would use deep in the money calls when buying Baidu.
Nike (NKE) is a reasonable investment for the next 5 years, given management's 5 year plan. Nike reported a great quarter on lower raw costs, yet the stock hasn't risen. Disney (DIS) is also a buy down at $30 and has multiple years of earnings growth.
While he is bullish on gold, Cramer admits to having mixed emotions about the rally in gold miners. Barrick (ABX) and Randgold (GOLD) reported good quarters, but GOLD's positive performance was preceded by a series of disappointments. Novagold's (NG) promises are just a "glint in the eye of a potential acquirer." Goldcorp's (GG) quarter was terrible because of natural disasters. The problem with miners is the costs and difficulty of getting gold out of the ground. Miners track, not gold, but the vicissitudes of the mining business, are "too complicated," said Cramer. He would buy bullion or SPDR Gold Trust ETF (GLD), and "leave the stock prospecting to others."
CEO Interview: Rick Hamada, Avnet (NYSE:AVT)
Cramer interviewed Rick Hamada, CEO of Avnet (AVT) the "supermarket for all things tech" and a strong tell on the sector. The stock was up one cent amid a terrible general sell-off after reporting a 7 cent earnings beat on revenues that rose 23.6% on organic growth and acquisitions. The company announced a $500 million stock buyback. Analysts were disappointed with the modest guidance, but Hamada said it was lowered only slightly to take into account the sensitive economic environment. The company's Asian business is strong, especially considering problems in Japan caused by the tsunami. When asked how he feels how Avnet will perform in the difficult economy, Hamada replied," We want to keep the wheels of commerce turning. As long as there isn't a liquidity crisis...it won't be destructive." Data center, storage, software, cloud and virtualization were all strong areas for Avnet the past quarter. When asked if the buyback should not have been planned in a less volatile market, Hamada emphasized that the buyback was for the shareholders and value investors and the purchase is around the stock's book value.
Cramer thinks Avnet would have shot up in a normal economy, but is staying cautious.
Get Historical, Not Hysterical: Ralcorp (RAH), Hershey (NYSE:HSY)
With the Dow down 520 points, Cramer says it is time to get historical rather than hysterical, and to evaluate whether or not this is really 2008 all over again. While many are discussing the imminent demise of Europe, Cramer doesn't see a scenario like 2008, because the problems in the U.S. during the past recession were hidden and complex. The recession unfolded and became complicated, finally creating up to $3 trillion in losses. Europe's problems involve a failure in bonds and banks, and are "fathomable." The economies have 5 failing countries to deal with rather than 14 million insolvent homeowners. While European bankers have dissembled and fumbled, Cramer is confident that they will come up with a viable solution. In any case, he doesn't see the Dow falling back down to 6,500 on a European recession.
Cramer took some calls:
Ralcorp (RAH) is not as good a food company as Hershey (HSY), which saw a $1.50 gain on Wednesday and performs well with falling gas prices.
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