End of Monster Buybacks? - Cramer's Stop Trading! (9/25/08)

Recap of Jim Cramer's comments on Stop Trading! Thursday September 25.

Help for Housing - KB Home (KBH)

Cramer said the principal beneficiary of Treasury Secretary Henry Paulson’s proposed bailout package will be the area that's been hardest-hit: California. The plan could spark a “monstrous and quick” return in that state’s market, he said, “maybe even within the year.” KB Home is a "good company, obviously in a terrible industry," with a good balance sheet and a safe dividend, he said. KB Homes, a California homebuilder with a great dividend, would be the play then. Cramer recommended sitting on that payout until the market turns up. KB Homes is the “quickest way to make money off this plan, that’s a non-bank,” he said.

Surging Latin America - CPFL Energia (CPL), Vale (RIO)

Another idea Cramer offered up was CPFL Energia (CPL), which has a 7% yield. "I'm willing to actually go to a Latin American stock here," he said, explaining that that area's been so hard-hit that the stock could bounce. He cautioned that he's not ready, though, to endorse Vale. Vale is not a buy until commodities demand in China resurfaces.

The Buyback - General Electric (GE)

Cramer used General Electric, which he owns for his charitable trust, as an example when discussing buybacks. “Here's a company that has bought back stock for years and years and years, and the buyback did nothing," he said. General Electric’s stock-buyback suspension could signal a massive reconsideration on the part of corporate America on whether they’ll authorize such large share repurchases ever again, Cramer said. The practice has done virtually nothing for General Electric. "Maybe this is the end of the monster expensive buybacks," said Jim Cramer.

On Track – CSX (CSX)

Lastly, Cramer said rails company CSX is a good play because there’s little chance of the company cutting earnings, which is more than he can say for technology stocks right now. Secure-earnings plays are what Wall Street’s looking for right now.

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Comments

[D-D:]

I did some research on GE and it is truly a conglomerate. Buybacks make a very little difference unfortunately for GE. However under normal circumstances, EPS would go up.
DD
valuestockinvestors.bl...

2008 Sep 26 08:10 AM

[HOBBorg:]

Cramer's Comments: Help for Housing - KB Home
"KB Home is a "good company, obviously in a terrible industry," with a good balance sheet and a safe dividend,...

I respectfully disagree; KB Home is a terrible company, obviously in a terrible industry. KB was one of the first builders to target unqualified buyers and participate heavily in predatory lending, which contributed greatly to the massive real estate market meltdown. In fact, KB paid a token $3.2M fine to HUD for loan irregularities not long ago. KB should be given the recognition due as a key player in this national financial crisis. KB Home is a giant to be prosecuted, instead of trusted by investors.

2008 Sep 27 04:03 PM

[Pfloyd234:]

GE is a joke. The stock has gone down the last 6-7 years under the worthless CEO Jeff Immelt. They are still doing business with Iran who help to kill our soldiers and their NBC division is a joke. It is the most corrupt news organization in the Country. It has officially become the democrats official news organization. Immelt has done nothing but run that company into the ground. The fact that this man is still running GE can only mean that he has somehow bought off the board. Because his performance would cost anyone else their job for sure!!!!

2008 Sep 28 03:09 AM