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Cramer's Mad Money - 6 Stocks to Buy When Fundamentals Matter Again (6/24/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday June 24.

NIke, (NYSE:NKE), Bed Bath & Beyond (NASDAQ:BBBY), Adobe (NASDAQ:ADBE), Darden Foods (NYSE:DRI), Jabil Circuit (NYSE:JBL) CarMax (NYSE:KMX)

With the macro situation seems disastrous, with European problems and the BP oil spill still spurting disaster, Cramer noted the good news from great American companies is being consistently ignored.

1. Nike (NKE) reports it has "never been more profitable" and has record cash flows of $2.8 billion, yet the stock dropped $2.89.

2. Bed Bath and Beyond (BBBY) saw a 53% improvement in earnings per share and a 40% increase in gross margins, but the stock was taken down $2.34.

3. Adobe (ADBE) saw 34% improvement in revenues and has $2.1 billiion in cash. The company has repurchased 2.5 million shares, and while Apple's iPad doesn't use Adobe, ten other tablets might. In spite of the news the stock fell $2.

4. Darden Restaurants (DRI), Jabil Circuit (JBL), and CarMax (KMX) gave bullish data, but their stocks declined.

Cramer thinks these stocks rally once fundamentals start to matter again. He would buy, but would wait for the market to stabilize somewhat.


With oil continuing to gush in the Gulf of Mexico, one obvious stock to put on the Sell Block is St. Joe, a property developer in Florida, 70% of whose properties sit on the "now imperiled coastline." The positives just don't matter; the company bought 577.000 acres of land at a rock bottom price, is expanding beyond luxury properties into commerical real estate and is suing BP (BP) for damages. If tar balls show up on beachfront property no one will want to buy.

If this is such a clear sell, why is Cramer singling JOE out? Because three analysts rate the stock as "neutral" and one says it is "undervalued." Cramer has three words for that analyst: "Sell, sell, sell."

"St. Joe down 40% off the oil spill isn’t an opportunity,” Cramer said, “it’s a falling knife and it will be able to cut you unless we get some certainty, some clarity about the scale of the damage.”

Apple (NASDAQ:AAPL), Disney (NYSE:DIS), Hasbro (NASDAQ:HAS), McDonald's (NYSE:MCD), VF Corp (NYSE:VFC), Nike (NKE)

Cramer created a portfolio for kids last year: Apple (AAPL), Disney (DIS), Hasbro (HAS), McDonald's (MCD), VF Corp (VFC). This portfolio is up 50% for the year compared to the 17% gain of the S&P 500. Cramer would stick with these stocks with the exception of VF Corp, which is too linked to Europe. While VF Corp saw a 28% gain, Cramer thinks it may be topping, since 30% of its revenues are from Europe. Nike (NKE) however, has exposure to China and emerging markets, and its advanced orders offset its disappointing quarter. Inventory for NIke is down 13% and its cash flow is up nearly 50%.

Cramer would keep the children's porftolio as it is, but would replace VF Corp (VFC) with Nike (NKE).


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