Cramer's Mad Money - The Speculative Stock of 2009 (6/5/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday June 5.

Speculative Stock of 2009: SallieMae (NYSE:SLM)

SLM is proof that President Obama is a market-mover. When Obama decided the Department of Education, rather than private companies, would be designated to take care of private student loans, SLM shed $54 from its stock price. Credit companies also lowered SLM's debt ratings. Cramer thinks SLM has been beaten down excessively and doubts that the future of the company is necessarily bleak.

In the worst case scenario, if SLM were to go under, there would still be $14 to $15 run-off value from its current loans. The stock is trading at an unbelievably cheap 3 times earnings, and Cramer doubts Obama's plans will materialize, since many institutions of higher learning are not yet prepared to provide direct financing, and even with the reforms, debt collection and loan services, specialties of SallieMae, will still be in demand. Cramer predicts SLM could double by the end of the year.

Broadcom (BRCM). Emulex (NYSE:ELX)

Tech is hot, but Cramer isn't recommending just any tech stocks, and has been focusing on smaller speculative plays, especially in the semiconductor space. While Broadcom might not be exactly small or undiscovered, the demand for chips is so intense, Cramer would take a look at this company whose clients include Apple, Nokia and Samsung. Most of Broadocom's chips are used in wireless phones and broadband internets, sections of tech seeing huge growth. Broadcom has 42% market share in Ethernet chips and is the number one chip producer for cable set-top boxes and wireless LAN.

Broadcom is set to be the leader in the sector for combination chips which will can be used for FM radio, Wi-Fi and a global positioning systems. Currently only 5% of smartphones use these combo chips, but the number is expected to grow o 75% over the next few years. Although Broadcom's attempt at a hostile takeover of Emulex failed, Cramer thinks ultimately Broadcom will succeed in acquiring this producer of cards that connect computers to data storage.

Apple (NASDAQ:AAPL), Boeing (NYSE:BA), Agnico-Eagle Mines (NYSE:AEM), Hershey (NYSE:HSY), Colgate-Palmolive (NYSE:CL), ConcoPhillips (NYSE:COP), JP Morgan (NYSE:JPM), Johnson&Johnson (NYSE:JNJ)

The worst unemployment number since 1983 might actually be good news. How? While indicative of the amount of pain in the economy, the 9.4 unemployment number was actually less than many doomsayers expected, according to Cramer, and is a far cry from the 33% unemployment during the Great Depression. After the collapse of Lehman Brothers, companies streamlined their workforce, but thanks to the stimulus plan, an upturn in the economy and Obama's plans for GM and Chrysler, the country was spared a second round of mass layoffs.

While the recession may continue, Cramer thinks most of the firings are over. He would continue buying B.O.A.T (banks, oil, aerospace and tech) stocks, and suggests JP Morgan, ConcoPhillips, Boeing and Apple. Those worried about inflation should look into Agnico Eagle Mines or SPDR Goldshares. Hershey, Colgate-Palmolive and Johnson&Johnson are buys for those who expect a slower recovery.

Mad Mail: Capital One Financial (NYSE:COF), Ebay (NASDAQ:EBAY)

Viewers made several suggestions for new inductees to his CEO Wall of Shame. Cramer defended Capital One Financial CEO Richard Fairbanks after he was accused of raising interest rates on loyal customers, and said the CEO is doing the best he can in a difficult environment. When another viewer complained about John Donahoe of Ebay, Cramer noted the company has a lot of assets and former CEO Meg Whitman was no better than Donahoe.


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