Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program,Friday April 4. Click on a stock ticker for more analysis.
Homebuilders’ Tax Break
Cramer called the $6 billion rebate for homebuilders “outrageous and immoral” since the sector caused the current mortgage crisis, and will most likely use the money to build more homes, a move that will further depress the housing market. Instead, the government should be paying homebuilders not to build until the crisis passes, and thinks Congress is under pressure from the housing lobby, since the sector was not included in the stimulus package; "This is the same Congress," he said, "that refuses to help the hard working homeowner by allowing the Federal Housing Administration to back home loans and help keep people in their houses." Cramer urged viewers to write their elected officials and protest the tax rebate.
CEO Interview: Fred Hassan, Schering-Plough (SGP)
Fred Hassan appeared on Mad Money again on Friday to discuss further the fallout from the controversy over SGP’s anti-cholesterol drug, Vytorin. SGP announced $1 billion cost-cutting measures and a 10% reduction in staff following the debacle, although Hassan says business is still strong overseas and the lowering of the company’s estimates by analysts was a “natural emotional reaction” to the non-scientific negativity of the doctors on the panel; “Patients should stay on their meds," he said. "There is no science behind these few, vocal critics." Hassan added that SGP has the second highest number of potential drug approvals between now and 2012, and the company has $15 billion in sales from other products. Hassan denies rumors that SGP will be taken over. Cramer commented, “I think there’s a lot of upside here,” he said, but added. “I think it’s grossly undervalued, but remember – I’ve been wrong.”
Dividend Stocks: Dow Chemical (NYSE:DOW), Permain Basin Royalty Trust (NYSE:PBT), World Wrestling Entertainment (NYSE:WWE), CPFL Energia (NYSE:CPL), HCP (NYSE:HCP) In a low-growth environment with falling interest rates, high-dividend stocks are the way to invest, but not all dividends are created equal. Cramer choose five companies which offer high, secure dividends and seem likely to increase these yields in the future. Dow’s 4.2% yield makes up for its lackluster financials, and the fact that it is levered to the “real” economy with 65% of its business overseas makes it a safe dividend stock. PBT offers a high 9.8%. However, since it is not taxed at the normal rate of 15%, Cramer would save this for a 401k or IRA to defer tax payments as long as possible. This is also true of HCP, a healthcare REIT with a 5.2% yield. WWE’s yield is 7.8% and half of its revenues are generated overseas. Finally, Cramer returned to Brazil to recommend CPL, which is the largest utility company in the country and keeps expanding. Further growth should lead to an increase in its 5.9% dividend.
Mad Mail: Bear Stearns (NYSE:BSC)
Cramer received an e-mail from Peter in Illinois, the famous viewer who asked if his money was safe in Bear Stearns. He confirmed that Cramer was recommending keeping money in the bank but not in the stock; “My question was specifically about the assets that were in my different accounts. It had nothing to do with the equity BSC.” Peter said. When another viewer asked whether he should invest in smaller or larger value stocks when starting out, Cramer advised, “The first $10,000 in an index fund. You have to learn how the stock market works…the most important thing you need to know is, until you’ve done the homework, unless you have the time and inclination – one hour per week per position – mutual funds, mutual funds, mutual funds.”
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