Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 4.
There is a self-destructive tendency among some investors to want to go bottom fishing in terrible stocks. They are in search of takeovers and turnarounds in companies that are simply finished. There are those who are trying to find reasons to buy Research in Motion (RIMM), since its BlackBerry still has 77 million users. People use Yahoo (YHOO), so they wrongly conclude the stock is worth buying. However, Yahoo is not able to bring out or create value or to compete with Google (GOOG). Yahoo has no significant social networking or cloud exposure, unlike Google. RIM can't hope to compete with Apple (AAPL). Cramer would abandon RIM and Yahoo, since these stocks are mere shadows of their former selves.
With the Dow plunging 120 points, investors felt Wednesday was a replay of 2011, with Europe back in the driver's seat. The terrible Spanish bond auction brought stocks down, and domestic news was not that good; truck orders were less than expected and SanDisk (SNDK) reported a sub-par quarter. Gold and oil took it on the chin. However, Cramer would not switch from bull to bear for the following reasons:
1. Ford (F) boosted the number of cars it expects to build. Real estate seems to be coming back, and retail is strong.
2. After the best quarter for stocks in 14 years, it is reasonable to expect a pullback. Earnings season is approaching, and investors are worried about yet another disappointing quarter from Alcoa (AA). Stocks are simply taking a breather.
3. Oil prices will not go down for the long-term as long as the economy is generally strong and there are global concerns, like the problems in Iran.
4. Gold demand is not dwindling. Gold mining stocks are not doing well because they are not able to find enough gold and it is expensive to get the commodity out of the ground. Goldcorp (GG) has declined 16% and Agnico-Eagle Mines (AEM) is down 49% for the year, but SPDR Gold Trust ETF (GLD) is up from $139 to $157 year over year. Gold miners are not an indication that demand is dropping off, but quite the opposite; they are not able to keep up.
Cramer took some calls:
Zynga (ZNGA) made an acquisition, and with its popular games, it is tempting to say Zynga is a "buy," but Cramer says he needs to do more work before recommending the stock. However, he would not sell it.
Alcatel-Lucent (ALU) is a "terrible company" and Cramer would not own it. "You are better off buying a lottery ticket."
One way to play the build out in mobile and wireless is with tower stocks. SBA Communications (SBAC) has made a lot of money with its many towers and antennae to provide more wireless services to customers. With fast, sophisticated gadgets selling aggressively, customers will need more bandwidth, and more towers and antennae will be needed to keep up with this demand. SBAC currently has over 9,000 towers, and when it gets an order from clients, it can simply add new antennae and passively charge customers, like a rent model. This business model gives the company huge operating margins. Cramer thinks both American Tower (AMT) and SBAC are superior to rival Crown Castle (CCI), and SBAC is a better buy than AMT because it is just a quarter the size of its larger competitor.
On Tuesday, Cramer discussed how Microsoft (MSFT) and Intel (INTC), the titans of "old tech," are getting their groove back. The charts indicate that if Intel breaks above the $30 ceiling under which it has been stuck for a long time, it could rise to $34, for a 25% gain, and if Microsoft (MSFT) moves beyond $34, it could rise 50% to $47. The companies trade at about 10 times earnings with 10% growth rates. MSFT offers a 2.5% dividend and Intel's yield is 3%. Both have strong cash flows and may increase their dividends.
While these might seem like old-fashioned companies, both are innovating to deal with the growing demand for mobile gadgets and the decline of PCs. Intel is still the dominant chip maker and still has significant demand for PCs in emerging market countries. Servers and data centers are a growing part of Intel's business, and Intel is making chips for tablets. Intel reports in two weeks, and may be a buy on weakness ahead of the quarter.
Microsoft will benefit from its new product cycle with its Windows 8 coming out in late summer or early fall. Xbox is still a major force in the gaming space. Cramer would wait for MSFT to drop to between $29 or $30 before buying.
Cramer took some calls:
SanDisk is down 5 points following a poor quarter. Cramer would wait for a move up of a couple of points and sell the stock.
Xerox (XRX) is not a good stock; "There is nothing there. Move on."
Angie's List (ANGI) is not a stock worth investing in.
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