Cramer's Mad Money - A Healthy EGO (8/12/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday August 12.

CEO Paul Wright, Eldorado Mines (NYSE:EGO)

Cramer has been bullish on gold and has discussed GoldShares SPDR (NYSEARCA:GLD) and Agnico Eagle Mines (NYSE:AEM). Another one of his favorites is Eldorado, which is up 39% even though gold has only risen 7%. Cramer thinks Eldorado has higher to go, especially since it can evade the problems faced by other miners which operate in politically unstable regions like Africa and Venezuela; Eldorado's mines are located in relatively tranquil areas like Greece, Turkey, Brazil and China.

Paul Wright said that while many new mines have been set back due to weather, they are expected to operate as planned by 2010. He discussed the company's "grass roots" exploration which keeps costs of discovery to less than $10 an ounce. Wright added the advantage of having newer mines is they have plenty of supply and he expects to continue to expand into China.

Paychecks (NASDAQ:PAYX), Automatic Data Processing (NASDAQ:ADP)

The end of the recession will bring bad news and good news; lower unemployment is a reason to be happy, but when the Fed raises interest rates, there will be some complaints. Paychecks and Automatic Data Processing are plays on both aspects of recovery. Obviously, as more people are hired and more paychecks are printed, increased volume will mean more business for both companies, but this isn't the whole story. Both companies charge interest on money their clients send to cover employee payrolls, so higher interest rates will add profits. Although Paychecks trades at a higher multiple (20) than Automatic Data Processing (16), Cramer prefers Paychecks because it attracts more clients and has a larger dividend.

Starwood Property Trust (NYSE:STWD), Emdeon (NYSE:EM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C)

It is hard to decipher the topsy-turvy markets lately, and Cramer sees a gentle correction ahead. He commented that Starwood Property Trust's IPO did poorly at $20 because it was priced too high, and there are still worries about commercial real estate. However, medical billing company Emdeon's IPO at $15.50 was a winner, and gained $2.50, because it is in the right sector. Cramer thinks the volatility of the market is due to the needs of hedge fund managers who may jump in to buy as soon as stocks dip down, but may also decide to dump a particular stock en masse. Cramer expects a minor correction, but thinks the decline will be shallow since money managers have a constant worry about being underinvested. He likes the financial sector, especially Bank of America, Wells Fargo and Citigroup.


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