Cramer's Mad Money - 10 Reasons to Buy Stocks (3/17/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday March 17.

10 Reasons to Buy Stocks: Financial Select Sector SPDR (NYSEARCA:XLF), Lincoln National (NYSE:LNC), Apple (NASDAQ:AAPL), Oracle (NYSE:ORCL), Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), Massey Energy (NYSE:MEE), Hartford Financial (NYSE:HIG), Financial Engines (NASDAQ:FNGN)

With the S&P 500 and the Dow rising to new highs for the year, Cramer pulled out the yardstick he has been developing for 30 years to gauge whether a market is good for buying or for selling.

1. Transports are strong. Since transports indicate the movement of products and active commerce, they are an excellent tell on the market.

2. Rally in the banking index. Since available credit is the lifeblood of business, strong financials often indicate a strong market. Financial Select Sector (XLF) reached a new high on Wednesday.

3. Positive Reaction to Upgrades. In a poor market, no one cares about upgrades, but the fact Lincoln National (LNC) jumped 4.4% on an upgrade was a bullish sign.

4. Tech Rally. The bellwether tech names are up: Apple (AAPL), Oracle (ORCL), Microsoft (MSFT) and Intel (INTC), which means long-term tech themes are still gaining strength.

5. Cash Is Stashed on the Sidelines. A lot of investors got out of the game. With cash on the side, it is only a matter of time before they start pouring it once again into stocks.

6. Acquirers Rally. When the market is flat or down, companies that announce they are going to buy get hit. But Massey Energy (MEE) was up yesterday after it announced it is going to buy Cumberland.

7. Positive Reaction to Secondary Offerings. Often investors worry that secondary offerings are going to dilute share value. However, Hartford Financial (HIG) rallied 5% on the announcement of its secondary offering.

8. IPOs Rise in Price. In a bear market, there are few IPOs and when there is an initial public offering, it starts the day flat or declines. Financial Engines (FNGN) started the day at $13 and jumped to $15.

9. The Market Has Good Breadth. What does this mean? The amount of advances in general outnumber declines. In 2008, before the market crashed, the opposite was true.

10. Pessimism is High. The fact that there are so many cynics prevents the market from getting overhyped. Excessive bullishness is more dangerous than an abundance of bears.

“My 10 touchstones that I’ve used for 30 years say this market is in good health,” Cramer said, “and they have rarely led me astray.”

CEO Interview Mickey Drexler, J.Crew (JCG)

While Cramer urges viewers to pore over earnings conference calls, sometimes subjective factors can make an investor decide to buy. CEO Mickey Drexler and J.Crew's (JCG) fantastic brands are responsible for the "fabulous blowout quarter" J.Crew reported recently. This company is “a top-notch, best-of-breed retailer that is indeed firing on all cylinders,” said Cramer.

Drexler is bringing the same vision that transformed the Gap (NYSE:GPS) into the definitive retailer of the 90s to J.Crew, which is reinventing itself for the new consumer. The company is responsive to the way customers assess value since the recession, and Drexler declared, "The era of the expensive men's suit is over." J.Crew is developing new brands; Crew Cuts for kids, Madewell for women, and is planning a new men's store and is opening a wedding-themed outlet this summer.

Cramer called Mickey Drexler a master at the conference call and said the company excelled in the "congratulations quotient" with 10 out of 16 analysts hailing the chief. Even though the stock is up 386% from its 2009 lows, Cramer says it is a buy.

Mad Mail: NSTAR (NYSE:NST), Clean Energy Fuels (NASDAQ:CLNE)

Cramer was asked about NSTAR (NST) on Tuesday and admitted he needed to research the stock first. On Wednesday, he concluded that, with a 5% dividend yield and a solid track record, the stock is a buy, especially since it does not generate power directly, but passes on supply costs to customers, and is not vulnerable to future environmental mandates.

Cramer told another viewer to take profits on Clean Energy Fuels (CLNE) which was up after reporting a strong quarter. He said he disagreed with Boone Pickens' prediction of natural gas legislation passing by Memorial Day, because he thinks healthcare reforms will be passed first.


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