Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Thursday June 26.
For Sale: Honeywell (HON), Boeing (BA), General Motors (GM), Oracle (ORCL), Johnson Controls (JCI), Research in Motion (RIMM), Nike (NKE) ConcoPhillips (COP), Vale (RIO), Potash (POT), Chesapeake Energy (CHK), Schlumberger (SLB), Heinz (HNZ), GlaxoSmithKlein (GSK)
On a selloff when the Dow drops 358 points, gold seems to be the only investment. In such an environment, Cramer would sell stocks that aren’t working. Not only should stocks in troubled sectors be sold, like Boeing, but also “pin action” plays like Honeywell, which makes parts for airplanes. Similarly, he would sell both GM and Johnson Controls, which make car parts, and Oracle, which supplies technology used by banks. Cramer would get rid of financial and housing stocks. When best-of-breed stocks like RIM and Nike fall, the best thing to do is to look at what will recover first: minerals, agriculture and energy. Cramer would buy COP, Potash and Vale on the decline. He also recommended Chesapeake Energy, Schlumberger, Heinz and GlaxoSmithKlein.
Smith International (SII)
Cramer wants to raise consciousness about offshore drilling, which was once considered harmful, but is now a cleaner operation thanks to new technology. “The stocks in play are cheaper, but the businesses are doing better.” Smith International produces clean water-based drilling fluids, and 20% of its business comes from recycling oil-based fluids. Smith and two other companies own 75% of the market in these drilling fluids and Smith is number two in the drill bits market. The company plans to buy back 7.5% of its shares, and trades at 16.5 times earnings with a 25% long-term growth rate.
Cramer took issue with Steve Rattner, who told Portfolio magazine that Cramer says “buy” and never says “sell.” The existence of his weekly segment, Sell Block disproves this assertion, said Cramer, and he pointed out some successful calls from last week. He recommended buying DRI if it declined before its report, and after earnings, the stock jumped 6.5%. Cramer successfully predicted dips in Nike and Research in Motion, and thinks RIM’s decline is a buying opportunity. Cramer reiterated his bearishness on retail and said aside from Costco, TJX, Wal-Mart and Urban Outfitters, retail cannot be owned until stores start closing. Cramer is also bearish on ConAgra.
CEO Inerview: Russell Huffer, Apogee (APOG)
Apogee was one of Cramer’s Green Week picks back in April, and since then it has declined 16%. Cramer asked Russell Huffer about this, and the CEO insisted the company met its own expectations, even though The Street was disappointed. He attributed to lackluster performance to “move ups” from the first quarter to the previous fourth quarter, and other “move outs” to later on in 2008. Huffer pointed out the company’s backlog and heightened demand for Apogee’s products, which make greener heating and cooling systems for buildings. Cramer says he needs to see another quarter before recommending the stock again.
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