Mad Money Play-by-Play RECAP: The Ben Bernanke Bond Barbecue (9/13/12)
Today, Mad Money‘s Jim Cramer commends Ben “Bull Market” Bernanke for firing up a bond barbecue. So what does this all mean really? Not wanting to get too caught up in “Fed Speak”, Coach Cramer helps us to visualize what Bernanke is trying to do. Thus, the “Kiss the Cook” get up he wears in his opening monologue. What “Uncle Ben” decided to do today, Cramer says, is to spark up a fire and throw gasoline on the fire to keep it burning. Basically, Bernanke’s actions today will keep mortgage rates low, raising the value of homes, and stimulating home building. As Cramer notes, if we feel our homes are worth more, we’ll feel richer, and spend more money (which is the reason behind the positive retails sales according to Cramer). It’s the “wealth effect and it’s a beautiful thing,” Cramer says.
- Boeing (BA): Regarding the potential merger between EADS and BAE Systems, should BA investors be concerned? Coach Cramer says there’s room enough for everybody, and as “dirt cheap stock” Cramer encourages everyone to BUY.
- Annaly Capital (NLY): Coach Cramer says to stick with NLY and ignore the downgrades.
Coach Cramer checks in with Mike Sutherlin, CEO of Joy Global Inc. (JOY). Mr. Sutherlin reveals that both markets in the U.S. and China have bottomed out and are moving sideways about now. He says it looks like stability is settling in which allows them to make more strategic actions. “If things stay steady, they will not have an up year,” Cramer quotes a statement from Sutherlin. What’s up with that? Mike Sutherlin again repeats that they’ll use the coming period stability to make more strategic manuevers in the market. Sutherlin does state, however, that power demand in China is increasing with an increase of orders for imported coal which would be good for JOY. Cramer’s final words: It is “darkest before the dawn” he says and thanks Mr. Sutherlin for his time.
DIVIDE & CONQUER
“Stock picking, ultimately, is about analyzing individual Co.’s and investing in those that can profit despite macro issues,” Cramer says. Some Co.’s, however, are better off broken up than whole. Manitowoc (MTW) has 2 different businesses – cranes and foodservice. Shocking, right? But the company operates everything from cranes to industrial fridgerators and ice makers. Cramer says MTW’s crane business is more sensitive to global growth, and suggest that MTW needs a “hip replacement.” But how much higher would the stock go if it were to split up? It’s crane biz would grow to be a $2.5 billion business, same for it’s food service business. As a best of breed company in it’s food service business, MTW would see a 28% premium from where it is now IF it split up.
- Limited Brands (LTD): It gets Cramer’s both thumbs up. BUY.
- Exelon (EXC): It’s got a terrible chart and Cramer doesn’t know why everyone is selling it. He says he’s got to do more work on it but it’s not looking good.
- Clean Energy Fuels (CLNE): It’s a spec, and the stock is stuck in the mud. This looks like a SELL for the moment.
- Chico’s FAS (CHS): Cramer would rather wait for a pull back as the stock is still too hot for his tastes.
- ProLogis (PLD): BUY.
- Cliffs Natural Resources Inc. (CLF): BUY.
- Altria (MO): BUY.
- Hudson City Banc (HCBK): SELL.
- Abbott Labs (ABT): BUY.
THE SELL BLOCK
How do you determine the quality of a Co.’s management? When high level people like the CFO bail, that’s a sign for you to bail on the stock. Two Co.’s come into play here: Francesca’s Holdings (FRAN) and Mellanox (MLNX). FRAN’s CEO and Founder is retiring later in the year, and it’s CFO was terminated earlier this year. MLNX’s CEO said he’d be leaving for “undisclosed reasons.” Jim Cramer admits he could be paranoid here and these companies could be off very well, but he also says it’s the paranoid that survives. He asks why would you want to take that risk anyway when there are other Co.’s with good management teams still intact? The bottome line: When high level people leave the company suddenly or unexpectedly, shoot first and ask questions later. That’s why Cramer’s putting FRAN and MLNX in the Sell Block.
NO HUDDLE OFFENSE
Mickey Drexler teaches Jim Cramer a lesson on fashion and retail. He says the retailers that have been succeeding are the ones who are discounting. He’s helped JC Penny (JCP) get back on it’s feet and also sits on the board of Apple (AAPL). Drexler said he missed Steve Jobs but thought Tim Cook was doing a fine job. This statement alone helped increase Jim Cramer’s backing of Apple. Speaking of Apple and it’s latest iPhone, Coach Cramer says he thinks it’s great and will be getting one for himself. Ultimately, Cramer’s lesson here is that “the best teachers never stop learning – and keep learning yourself.”
View Jim Cramer’s past advice and stock picks on Nerdles’ Mad Money archives HERE.
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