Cramer's Mad Money -Two Brazilian Power Plays (8/3/09)

Includes: CIG, CPL, DAR, EA, JCP, TWX, VZ
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday August 3.

CPLF Energia (NYSE:CPL), Cemig (NYSE:CIG)

With the declining dollar, Cramer suggests looking abroad for new ways to make money. Brazilian utilities offer the advantage of growing along with the national economy and benefiting from weakness in the American currency. CPLF is one of the largest distributors of electricity and also one of the cheapest. The company offers growth in the form of new projects while it continues to cut costs. CPLF's 6.8% dividend is safe, and if reinvested, can mean investors will double the amount of the initial stake in 10 years.

While Cemig is government-owned, it doesn't have the bureaucratic problems other nationalized companies have. Cemig is in the process of re-negotiating contracts at higher amounts and will have more than enough cash flow to cover its 5.9% dividend. The company should continue its tradition of returning profits to shareholders.

Negative Nancies

The Dow closed 115 points higher on Monday, the S&P 500 jumped to levels it hasn't seen since November and the Nasdaq is up 27%, yet Cramer says there are plenty of "negative Nancies" out there who are trying to make investors bearish. Some are fund managers who sat on the sidelines too long and want to bring stocks down to an affordable entry point. However, some are just pure skeptics, and for these people, Cramer pointed to bullish signs in the market. Copper's surge put doubts about China's economy to rest, home prices are rising and the car industry is back thanks to the government's "cash for clunkers" program.

Oil, banking and tech sectors are the new leaders, and Cramer's picks in the sectors include Wells Fargo, Apple, Bank of America and Research in Motion. On concerns that a huge decline may follow the best July for the stock market since 1997, Cramer predicted instead a a “gentle, shallow pullback," and urged investors not to retreat to the sidelines when the market pulls back, but to stay invested for the long-term.

Time Warner (NYSE:TWX), Verizon (NYSE:VZ)

The secret behind many business success stories is a stellar CEO, and this is certainly true in the case of Time Warner under the leadership of Jeffrey Bewkes, who has sold off unprofitable parts of the company, such as AOL and Time Warner Cable and has focused on the stronger businesses, such as movies. The cable business is simply too competitive, especially with Verizon's triple play of phone, internet and cable, and Bewkes picked the right time to spin off Time Warner Cable, according to Cramer.

TNT, TBS and the Cartoon Network has "endlessly re-runnable material" and ads pay for the shows "many times over." Its movie business, which has 21% market share, generated a record-breaking $1.8 billion in revenues. While the magazine business is losing money, the company owns the iconic names in magazine publishing: Fortune, Time, Sports Illustrated, and Bewkes says losses in this area have been contained.

While Time Warner beat earnings expectations, revenues were weaker than expected because of AOL and Time Inc. However, Cramer sees the stock reaching $32-34 when advertising recovers. Cramer is bullish on Time Warner, which has reinvented itself into an entertainment powerhouse.

Mad Mail: JC Penney (NYSE:JCP), Electronic Arts (ERTS), Darling (NYSE:DAR)

One caller asked Cramer what is really meant by a "full economic recovery." While Cramer says the definition is subjective, a couple of positive GDP reports and a few months of rising employment or at least a a cessation in the growth of unemployment could be sufficient to call the end of a recession. When viewers asked about JC Penney, Electronic Arts and Darling, Cramer said none of these stocks are worth buying right now.


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