Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday, August 20.
Real Buys are Out There - Freddie Mac (FRE), Fannie Mae (FNM), TJ Maxx (NYSE:TJX), Hewlett Packard (NYSE:HPQ), Research In Motion (RIMM), Apple (NASDAQ:AAPL), Intel (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM)
“There are still some hidden gems in this market,” Jim Cramer told viewers. While the markets continue to focus almost exclusively on the fates of Freddie Mac and Fannie Mae, Cramer said the real buys may be in retail and tech. Cramer said that he's taking a new look at the retailers after many have reported better-than-expected numbers this past quarter. He said that TJ Maxx is now among his favorites. In the technology sector, Cramer said the earnings from Hewlett Packard really do matter and that it's amazing that HP's business has been so good in a worldwide slowdown. He sees strength in many of the big cap tech names like Research In Motion, Apple, Intel and even Qualcomm.
Surviving the Ethanol Mandate - Tyson Foods (NYSE:TSN)
Tyson Foods CEO Dick Bond provided insights into the state of the food business as it struggles against sharply rising inflation in raw costs. Bond reiterated his opposition to government mandated quotas on ethanol production, saying that the conversion of 30% of the nation's corn crop to 3% of the country's gasoline needs hurts consumers more than it helps. “The consumer hasn’t really felt the effect” of these increasing costs, Bond said, because his company has so far been absorbing them. He called the mandates just wrong, saying the consumers haven't yet felt the true magnitude of the inflation since many companies have been working hard to absorb them. According to Bond's estimates, the price of corn could drop as much at $1 to $1.20 a bushel if the mandates were repealed. Asked about growth opportunities in China, Bond said the Chinese population only consumes about 20 pounds of poultry per capita. He said that number could rise to 30 pounds in five to six years. Another area of strength for Tyson is the tortilla market. Bond said his company is the second largest producer of tortillas and is rapidly taking market share from traditional bread products.
Outrage of the Day – Fannie Mae (FNM), Freddie Mac (FRE)
Cramer wondered “what ever happened to stopping trading when news is pending?” In the “old days,” when a company had news that was known by some, but not by all, trading would be stopped until that news could disseminate, he noted. However, in the case of the precipitous decline of Freddie Mac and Fannie Mae shares, Cramer said the trading indicates someone, somewhere, knows something. He urged the government to just make its intentions known so the markets can move on.
Unsolicited Bid - Waste Management (WMI), Republic Services (NYSE:RSG)
David Steiner, CEO of Waste Management, discussed his company's recent unsolicited bid for competitor Republic Services, which has negatively impacted its share price. Steiner defended the offer, saying that the combined company has the potential to leverage the great assets of both companies and create even more value. He emphasized that Waste Management is committed to creating shareholder value, and that if the deal doesn't create both long-term and short-term value for its shareholders, it would walk away from the deal. Steiner said that he feels Waste Management is undervalued, and even if the Republic deal doesn't happen, it's still good news for the industry and his company wins. He predicts strong growth and margin expansion to continue, either way.Final Thoughts
Cramer thinks we're near a bottom in the Chinese markets, and that should cause a global stabilization in oil and other commodity prices. He said that stabilization, along with his target price for oil at $110 a barrel, would be good news for technology, infrastructure and coals stocks, as well as for the banking stocks, which could meant a fresh injection of Chinese capital.
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