Ready To Roar - Cramer's Mad Money (9/12/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday, September 12.

The Market That Roars (Or Not)

"If the Federal Reserve cuts interest rates next week, this market will be ready to roar," Jim Cramer told viewers. "If not, be prepared for more of the same." Cramer hopes for a 50-basis point rate cut at the Federal Open Market Committee meeting on Tuesday, but he says it's difficult to figure out what the Fed will do. "You just can't count on this Fed." Despite falling oil and commodity prices, weakness in the dollar and gold, and rising unemployment, Cramer said the Fed still seems to be worried about inflation. "The signs of deflation are all around us; inaction isn't going to cut it," he added.

Financials Hit Again - Fannie Mae (FNM) and Freddie Mac (FRE)

Banking and financial institutions have been hit again, said Cramer, now that the government has all but wiped out the preferred shares of Fannie Mae and Freddie Mac. The preferred shares of the two mortgage giants are the vehicle many institutions use to raise capital. If investors now think the added protection preferred shares usually offer is gone, no one will buy them.

More Fortress Four - US Bancorp (USB), Wells Fargo (WFC), Bank of America (BAC), JP Morgan Chase (JPM)

Cramer said if the Fed does cut rates on Tuesday, he'd be a buyer of his "Fortress 4" banks, including US Bancorp, Wells Fargo, Bank of America and JP Morgan Chase.

$90 a Barrel - UPS (UPS), Walt Disney (DIS), Kimberly-Clark (KMB)

Also for next week, Cramer said he expects oil to dip below $90 a barrel. If that happens, he said he'd be a buyer of stocks that benefit from lower gas prices, companies like United Parcel, Walt Disney and Kimberly-Clark.

Standing Up to the Bully - Foster Wheeler (FMLT)

Cramer said in the war against relentless hedge fund selling, some companies are starting to fight back. He talked with Ray Milchovich, chairman and CEO of Foster Wheeler, a stock about his recent decision to buy back one-eighth of his company's common stock. Milchovich said the $750 million decision was in direct response to its share price being cut in half, despite the fact that company doubled its earnings in 2007 and increased them another 35% so far in 2008. He said Foster Wheeler holds no debt, has $1.3 billion in cash and is worth far more than its current market valuation. Responding to the critics who worry of project cancellations, Milchovich explained that Foster Wheeler has not seen a single cancellation or delay of any project. He said the company's toughest challenge remains finding the capacity to meet demand. He said he's seen no material change in the company's order flow, and still sees strong growth around the globe. Cramer reiterated his buy on Foster Wheeler.

Paper and Packaging - Temple-Inland (TIN), Packaging Corp of America (PKG)

"The paper and packaging business may be boring," said Cramer, "but it can make you money." He last recommended box maker Temple-Inland on April 7 at $13.98 a share. Since then, that stock is up 37%. Cramer says it's time to swap out of Temple-Inland in favor of its rival Packaging Corp of America. He said that Packaging Corp is a classic "catch-up" story and poised to surge higher as it "catches up" to its peers. Cramer cites the simple economics of the packaging business to support this view. The industry recently put through a $55-per-ton price increase, raising its top line growth. In the case of Packaging Corp, 50% of the company's costs are for energy, mainly coal and natural gas. With plummeting commodity prices, the company should be able to beat estimates handily. Cramer said he also likes Packaging Corp's 4.7% dividend yield, which is not only higher than investing in Treasuries, but essentially pays you to wait until the upside surprise occurs. With unplanned mill outages and strong exports keeping supplies tight, Cramer said Packaging Corp is a sure bet in an all too boring business.

Mad Mail - Whirlpool (WHR), Schering-Plough (SGP)

Cramer said that in addition to Whirlpool, other "early cycle" stocks include durable goods, retailers and homebuilders.
Cramer said that he feels negative press coverage makes Schering-Plough a stock you cannot invest in.

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Comments

[cynic69:]

Cramer is always wrong. He called the bottom two weeks ago and the market immediately sold off. 56 of 60 major oil fields are in serious decline worldwide. The specter of the coming energy shortage is going to insure market killing inflation. The whole world is falling into recession. Who is going to buy American products? I would say the you are making a big mistake if you are trading your 401K based on advice from Jim Cramer. BooYa!

2008 Sep 13 11:16 AM

[rhj123:]

Cramer's record is not better than other "talking heads". He seems to be correct on about 35% of his recommendations, if that high. Your own due diligence should at least equal that figure...or beat it.

2008 Sep 13 12:28 PM

[Britishsteel:]

Fed will not intervene here, its wave 2 up on daily chart of wave C down,they will come in in 4-5 weeks to stop the 3rd wave decline , Cramer is bullshit

2008 Sep 13 02:42 PM

[Chris1274:]

Why waste bandwidth on Cramer's babble? He's a clown, nothing more. You'd get better investment advice from the psychic hotline.

2008 Sep 13 02:43 PM

[ohm:]

Cramer is a valuable resource if he's for I'm against it!

2008 Sep 13 05:57 PM

[Pfloyd234:]

Its funny.....Cramer has his own show and worth millions and you people are writing bad about him on your.....computers!!! He must of done something right in life. Just ignore him if you don't like him!!

2008 Sep 15 01:39 AM

[nutty buddy:]

I am happy for his millions, but his "advice" cost me a lot of $$$.

2008 Sep 15 07:08 AM

[Packaging:]

How does Walt Disney benifit from lower oil prices?

Feb 09 09:42 AM

[User 407285:]

...lower oil prices could mean more americans taking driving vacations to theme parks

May 04 06:34 PM