On Thursday, following a strong and broad up day for the market, Mad Money host and former fund manager Jim Cramer stated that he was actually unhappy to see such a strong rally. Cramer stated that you have to ask yourself what problems were hidden on this up day, which appeared to be machine-driven, and remain cautious going forward. Cramer also stated that now may be a good time to realize some recent gains, if any, to sit with some cash and wait for better prices that may be coming in this choppy market.
Cramer stated that a European ban on short selling is also good news for the financials and the broader market, and also that the European powers-that-be will likely report a banking crisis response plan next week. Cramer also noted that gold finally broke, having a slight down day, as he was looking for gold to finally have a down day in this volatile week. Cramer also stated that he saw strong insider buying in many equities this week, at rates higher than Cramer can recall, while also noting that retail withdrawals were very high.
Cramer also stated Cisco (CSCO) reported strong quarterly earnings after about a year of poor reporting. Cramer also stated that CSCO’s strength internationally, in Mexico, Russia and China was strong. Cramer also was asked what he thinks about Nvidia (NVDA) as a tech investment and Cramer said it is too tough of a company to value in this market. Cramer suggested ARM Holdings (ARMH) as a better tech option. ARM Holdings designs the types of microprocessors that are used in the majority of touch-screen smart phones and tablets, such as Apple’s (AAPL) iPhone and iPad.
Cramer stated that this is the time to circle the wagons and stock to defensive, high-yield equities. Cramer noticed that numerous high-yield pharmaceuticals look attractive. Cramer stated he now suggests Sanofi-Aventis (SNY), which had a terrible day yesterday because it is French, and that it is now yielding over 5%. Cramer has also recently suggested Bristol Myers Squibb (BMY), which is on Cramer's high-yield stock shopping list for this current volatile market.
Cramer stated that Sanofi only does about 10% of its business in France and should not be so heavily associated with any French risks. Cramer also feels Sanofi has some of the least Medicare risk among large-cap pharmaceuticals. Additionally, Cramer noted Sanofi is now trading at 6.8x next year’s estimated earnings, while also having heavy exposure to emerging market growth and further synergies to come from its recent acquisition of Genzyme.
Cramer stated this is a good time for him to go back to his favorite oil investment, noting the sharp decline that oil has recently had, going down over 10 percent month to date. Cramer stated he feels EOG Resources (EOG) is possibly the most undervalued oil equity out there, as a strong producer in Bakken and Eagleford, which has gone down too much in this recent sell-off. Cramer stated that EOG was up strong, but that EOG will go down again, knowing this market. Cramer commented that there is simply too much unrealized value in the shale acreage that EOG has, based upon the conversation Cramer had with the CEO of EOG on Monday, where it was discussed that EOG beat its earnings estimates by a wide margin and yet is trading near its 52-week low.
Again, Cramer noted that this big up day looked machine made, and investors need to remain cautious like they would have in 2008, sticking to this week's stock shopping list, and selling and strong recent gains if you need money to buy into any further weakness.
Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.