Posted May 16th 2008 8:43AM by Jim Cramer
Filed under: Home Depot (HD), Market matters, Federal Natl Mtge (FNM), Clear Channel Commun (CCU), Lowe's Cos (LOW), Toll Brothers (TOL), Housing, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says the homebuilders won't quit, and that's making the early-cycle plays work. Have we really bottomed? The stubborn lack of decline in the homebuilders, coupled with the better-than-expected retail sales, the strong transports, and the conclusion of a deal like
Clear Channel (NYSE:
CCU) (
Cramer's Take), has created an environment where you are hard-pressed, if you rely on stocks as forecasters, to ignore the possibility of a bottom.
I watch the HGX like a hawk, the homebuilding aggregation, and it simply won't come down. That's despite the awful numbers, the covenant violations (
Standard Pacific (NYSE:
SPF) (
Cramer's Take)) the bad loans, the lack of mortgage money, the insistence of a down payment and an abysmal spring traffic season.
So, why are people buying the group that signaled the downturn? I think it comes down to price. If you force the homebuilders to sell, as
Toll (NYSE:
TOL) (
Cramer's Take) did this quarter, taking no gains on homes, you clean up inventory. If you clean up inventory, which is what happened in western Florida, you stabilize pricing. When you stabilize pricing, you bring out buyers. It is a virtuous circle.
Continue reading Cramer on BloggingStocks: Evidence of a bottom
Posted May 15th 2008 9:22AM by Jim Cramer
Filed under: Market matters, CBS Corp 'B' (CBS), Federal Natl Mtge (FNM), Washington Mutual (WM), Stocks to Buy, Cramer on BloggingStocks, MBIA Inc (MBI)
TheStreet.com's Jim Cramer says the value guys threw this party, so respect the hosts. Sometimes you just feel beaten into being positive. You just say, "OK, enough, I will accept the positives as they are being put out, not as I believe they are."
That's how I felt yesterday about
Freddie Mac (NYSE:
FRE) (
Cramer's Take). The company put out financials yesterday that looked better than expected, and for once I didn't question whether they were.
I didn't because the earnings from so many of the feckless players -- the
Fannies (NYSE:
FNM) (
Cramer's Take), the
Washington Mutuals (NYSE:
WM) (
Cramer's Take) the
MBIAs (NYSE:
MBI) (
Cramer's Take) and the
Ambacs (NYSE:
ABK) (
Cramer's Take) -- are all being greeted with a bizarre positive response, so bizarre that I bought into the "better than expected" rhetoric because I don't want to fight the value guys who are in control right now.
Elsewhere on the site, Doug Kass has been putting up some very strong arguments that numbers from the likes of Freddie are less than meets the eye.
Continue reading Cramer on BloggingStocks: Sometimes, you just have to relent
Posted May 14th 2008 9:30AM by Jim Cramer
Filed under: China, Market matters, U.S. Steel (X), United Technologies (UTX), BHP Billiton Ltd ADR (BHP), Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says that rebuilding from natural disasters can alter the growth picture for a country. Is it Katrina all over again? Or is it bigger? Much bigger? That's what I am thinking about this Chinese earthquake.
Katrina distorted the U.S.'s growth pattern for more than a full year. The raw materials, the effort, the work, the reconstruction affected businesses from small-scale retail to refining and infrastructure.
We don't really know how China works, although a lot of people tell us they do. To me, the Chinese are always a day away from revolution or civil war and the trick of the government is to stay one step ahead of the posse. (Chinese hands will dispute that, but you have to appreciate that it takes a special skill to be wrong for more than a century and still maintain credibility.)
That means massive reconstruction: bricks, lumber, cement, steel and all the trimmings. Massive imports, not controlled by the Chinese and their little negotiation games like they play with iron and steel and coal. Just full-bore buying and something that could take growth for China back to the levels that everyone thought it couldn't absorb without more inflation.
Continue reading Cramer on BloggingStocks: Earthquake recovery can change China
Posted May 13th 2008 9:00AM by Jim Cramer
Filed under: Hewlett-Packard (HPQ), Market matters, International Business Machines (IBM), Electronic Data Systems (EDS), Commodities, Oil, Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says this report highlighted where the success lies in this market: energy and petroleum. Fluor's (NYSE:
FLR) (
Cramer's Take) a monster. It shows you that what has hurt the other companies, particularly
Chicago Bridge & Iron (NYSE:
CBI) (
Cramer's Take), is pure execution.
This gigantic beat also serves to remind us of the big dichotomy. You are either in the energy and petroleum products game or you are in a lot of games that don't work.
It's not easy for these companies, some of which have lived off the duress of state and local governments, including
Shaw (NYSE:
SGR) (
Cramer's Take) and to a certain extent
Aecom (NYSE:
ACM) (
Cramer's Take) and
URS (NYSE:
URS) (
Cramer's Take), to become oil-and-gas plays.
The only ones that have transcended it beside Fluor are
Foster Wheeler (NASDAQ:
FWLT) (
Cramer's Take) and
Jacobs Engineering (NYSE:
JEC) (
Cramer's Take), and the only reason you would really know that is longevity. I remember in the early 1980s when FLR and then FWC would compete directly for all of the huge projects after the second oil shock.
Continue reading Cramer on BloggingStocks: Fluor shows the power of execution
Posted May 12th 2008 8:40AM by Jim Cramer
Filed under: Wal-Mart (WMT), Market matters, FedEx Corp (FDX), Oil, Stocks to Sell, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says FedEx exposed three market fictions with its news on Friday. Sometimes you have to wonder why some stocks just don't stay down after bad news.
Take
FedEx (NYSE:
FDX) (
Cramer's Take). Earlier this year, the stock shed about 10% of its value when it forecast worse-than-expected earnings, citing lower volumes and higher fuel costs. It then proceeded to rally 25% from that dismal forecast even as oil went up dramatically and business in the U.S., particularly retail business, got softer and softer!
Now we get pretty much a simple extension of what the company said last near the end of March, and people are acting surprised and furiously dumping the stock.
FedEx cuts to a couple abiding fictions in this market. The first is that all valuations are cheap, so it is OK to buy them. FedEx has long-term growth of 10% and sells at 14 times earnings, but I question both the growth and the multiple as being too high in a world where energy just won't quit. But that brings us to the second fiction: People have been buying this stock with the idea that oil just has to level off somewhere. Considering it didn't, how could anyone be surprised at this news? And the third fiction? The turn in the economy is right around the corner.
Continue reading Cramer on BloggingStocks: In retail, lower prices beckon
Posted May 9th 2008 9:13AM by Jim Cramer
Filed under: Major movement, Management, Market matters, Citigroup Inc. (C), Bank of America (BAC), Federal Natl Mtge (FNM), Countrywide Financial (CFC), Amer Intl Group (AIG), Wachovia Corp (WB), Washington Mutual (WM), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says the guys at the top don't know what they're doing, and it shows. AIG's (NYSE:
AIG) (
Cramer's Take) making everyone's life difficult today. That's in part because AIG had been the biggest proponent of "super senior," meaning they repeatedly said that their collateralized debt obligation (CDO) exposure was of the kind that was intelligent, measured and thoughtful. They talked endlessly about how their due diligence made the difference and that unlike all of the other buyers, they kicked the tires three times and never bought the plain ol' CDOs. Then they brought in professors from Wharton to be sure that even if all heck broke loose and they were being too aggressive, they would be hedged.
They also were the first to give you the percentages of how much could go bad and that even in the worst-case scenario, they were overcapitalized. And, most important, they were insurers, no need to mark to market, they can play it all out.
Plus, they touted their own struggles. They made the point that because of the turmoil at the top, they hadn't bought any bad stuff and stopped buying residential real estate products after 2005. What they did buy -- they assured us in that big teach-in dog-and-pony show in December -- was the extra-special nature of their particular buys and that, unlike everyone else, risk officers scrutinized every single piece of paper that went into their super senior insurance, meaning only the top-top part of a CDO-squared, the part where everything had to default ahead of it; they made a point of how impossible that would be.
Continue reading Cramer on BloggingStocks: AIG's foolishness puts cataclysm back on the table
Posted May 8th 2008 9:00AM by Jim Cramer
Filed under: Deals, Market matters, Allergan (AGN), Citigroup Inc. (C), Sprint Nextel Corp (S), Unilever ADR (UL), Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says the exchange rate plus massive undervaluations make the great brands prime targets. There's always been a groupthink in Europe about currencies. The companies that want to buy American companies have, at times, seemed to care more about the currency, or at least not buying a company in a country whose currency is in decline, than they care about the actual target.
That's what it looks like now that a large German company and now a large Italian company have decided to start splurging. It is no coincidence that
Deutsche Tel (NYSE:
DT) (
Cramer's Take) and Finmeccanica are exploring
Sprint (NYSE:
S) (
Cramer's Take) and
DRS (NYSE:
DRS) (
Cramer's Take). These companies are selling for something like 40% off for those bearing euros, and neither potential acquirer has debt problems or subprime issues, so the deals don't have big borrowing problems.
That's what I am thinking about when I see the better-than-expected figures today from
Unilever (NYSE:
UL) (
Cramer's Take) and the other day from Nestle. These companies are part of that same groupthink. They are looking, no doubt, at a
Heinz (NYSE:
HNZ) (
Cramer's Take) and thinking, "Wait, that's about a $10 billion company that's a global leader."
Continue reading Cramer on BloggingStocks: Europe is starting to eye U.S. gems
Posted May 7th 2008 9:05AM by Jim Cramer
Filed under: Cisco Systems (CSCO), Exxon Mobil (XOM), Market matters, Walt Disney (DIS), Chesapeake Energy (CHK), Anadarko Petroleum (APC), Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says natural gas producers are having a great year, and Anadarko may be the best of the bunch.Marcellus Shale. Ghana. Brazil. Wherever the oil and gas is. Wherever the chances to boost output.
That's
Anadarko (NYSE:
APC) (
Cramer's Take).
Fifteen percent growth or higher for many years. That's Anadarko.
Creating value for shareholders. That's Anadarko.
IPO of Western Gas. That's Anadarko.
And more important, it is not
ExxonMobil (NYSE:
XOM) (
Cramer's Take).
Anadarko is one of six companies, including
Apache (NYSE:
APA) (
Cramer's Take),
Southwestern (NYSE:
SWN) (
Cramer's Take),
XTO Energy (NYSE:
XTO) (
Cramer's Take),
Chesapeake (NYSE:
CHK) (
Cramer's Take) and
Devon (NYSE:
DVN) (
Cramer's Take) (
El Paso (NYSE:
EP) (
Cramer's Take) is threatening to join them!) that are believers.
Continue reading Cramer on BloggingStocks: Anadarko shines in good company
Posted May 6th 2008 9:26AM by Jim Cramer
Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Market matters, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says Filo and Yang own less than 10% of Yahoo! shares, so they can stall a deal but not stop it. Two guys with less than 10% of the shares outstanding blocked this
Yahoo! (NASDAQ:
YHOO) (
Cramer's Take) deal -- Jerry Yang and David Filo. I understand this logic. They are founders. They probably hate
Microsoft (NASDAQ:
MSFT) (
Cramer's Take). They feel tremendous pride. They think that surrendering to Microsoft would be like giving in to the Evil Empire.
But if they felt that, they should never have brought the company public. Once you are public you are for sale, either in pieces or all together, unless you have one of those travesty two-classes-of-stock configurations that I think shouldn't even be allowed and have almost always been disappointing.
So what happens? I think the stock acted very well yesterday. It should have been down more. I think what happened is that arbs looked at the holders and realized that if they bought up enough stock that was for sale they could force a sale or a new board of directors. Might take a year, but if you can buy something at $24 and sell it at $34 a year from now, well, let's just say that is a big win.
Continue reading Cramer on BloggingStocks: Two guys stalled the Yahoo! deal
Posted May 5th 2008 9:09AM by Jim Cramer
Filed under: General Electric (GE), Exxon Mobil (XOM), Market matters, Sprint Nextel Corp (S), Federal Natl Mtge (FNM), BP p.l.c. ADS (BP), Honeywell Intl (HON), United Technologies (UTX), Eaton Corp (ETN), Bear Stearns Cos (BSC), Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says there's some reason for caution, but no reason to get out of the market here.There all right there. Don't you feel it? Hundreds of stocks at resistance. Hundreds have formed a nice base. The Transports and the Dow are moving in synch. The earnings period surprisingly great, with so many companies not stung by the raw costs. Three straight up weeks, with all the commodity stocks showing signs of rolling over; most at crucial "must hold" levels except for gold, which has already crashed, making the inflation case much dimmer in the eyes of the traders.
Yet, you simply can't read the papers. They are too awful. The cost to the consumers for everything from food to gasoline is humongous and going higher, according to all the food execs I had on last week. We are getting nowhere near a bottom in housing. The layoffs, while not significant in the Labor Report on Friday, sure seem endless. The two major presidential candidates from the Democratic side want to tax the oil companies into oblivion, the leaders of the last year.
Exxon (NYSE:
XOM) (
Cramer's Take) blew the quarter. So did
GE (NYSE:
GE) (
Cramer's Take).
Too far, too fast, based on those grim items.
To me, this is the first week since the
Bear Stearns (NYSE:
BSC) (
Cramer's Take) bottom that I think seems aimless.
But perhaps there's a "split the difference" way to approach this week: options expiration.
Continue reading Cramer on BloggingStocks: Play this week with a steady hand
Posted May 2nd 2008 9:15AM by Jim Cramer
Filed under: Exxon Mobil (XOM)
TheStreet.com's Jim Cramer says we should watch them and Apache and Exxon -- these stocks will set the tone.You can always gauge rotations when some company that really misses, as
Colgate (NYSE:
CL) (
Cramer's Take) did with its gross margins the other day, can still take off after a momentary hit. You can also gauge rotations by how many times an
Apache (NYSE:
APA) (
Cramer's Take) or an
Exxon (NYSE:
XOM) (
Cramer's Take) will get hit on the same margins miss.
Make no mistake about it, the Exxon quarter was ugly, and the Apache quarter, after all the hoopla, was barely a beat. But both of those companies are making a ton of money and will one day work their way back -- APA before XOM, because XOM has underinvested in oil and overinvested in its stock.
But Colgate was just out-and-out pantsed by raw costs. They had good revenue growth but simply got more killed by food and oil ingredients than even Tyson (NYSE: TSN) (Cramer's Take), which was ground zero for ethanol madness.
Yet it snapped right back yesterday as if it didn't miss at all.
Continue reading Cramer on BloggingStocks: Colgate is the key to a group rotation
Posted May 1st 2008 8:40AM by Jim Cramer
Filed under: Market matters, Procter and Gamble (PG), Wrigley, (Wm) Jr (WWY), Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says they have successfully increased price, and their stocks have room to run.It's tough not to be a Pollyanna after talking to Bill Johnson, the CEO of
Heinz (NYSE:
HNZ) (
Cramer's Take), and after reading the
Procter & Gamble (NYSE:
PG) (
Cramer's Take) quarterly transcript. Both of these companies have had to deal with hundreds and hundreds of millions of dollars of raw cost increases, and both have not only come through with flying colors but are more profitable than I bet even they thought they could be.
PG is amazing. Almost every business was up much more than people thought possible, with divisions like razors and hair care (shampoo) so strong that you would think that suddenly a large part of the populace has decided to start shaving and shampooing for the first time.
Innovations, like the Fusion blade, have produced remarkable returns in a short time, as Fusion is yet another billion-dollar brand that didn't exist a couple of years ago.
Continue reading Cramer on BloggingStocks: Heinz, P&G overcome rising costs
Posted Apr 30th 2008 9:20AM by Jim Cramer
Filed under: Industry, Market matters, Citigroup Inc. (C), JPMorgan Chase (JPM), Merrill Lynch (MER), Goldman Sachs Group (GS), Cramer on BloggingStocks
TheStreet.com's Jim Cramer says they won't fail, but they can't be bought yet. What do the words "we have enough capital" mean? It means get ready for an offering.
Merrill (NYSE:
MER) (
Cramer's Take) last week said they had enough capital. So did
Citigroup (NYSE:
C) (
Cramer's Take). Of course they left themselves some sort of out. Merrill said it had enough "equity" capital, so it did a huge preferred deal. Citigroup stressed that it had more than it needed, but they just made you look like a moron if you bought stock the other day at $27.
But if you did buy, I have no sympathy for you, none whatsoever. I have no sympathy for you because I have said over and over again that as bank stocks go up, they must issue equity until housing stops going down. Every uptick must be met by equity if the downcycle is elongated.
Continue reading Cramer on BloggingStocks: Toxic banks will keep raising capital
Posted Apr 29th 2008 9:09AM by Jim Cramer
Filed under: Industry, Apple Inc (AAPL), Market matters, Goldman Sachs Group (GS), Eaton Corp (ETN), Delta Air Lines (DAL), Stocks to Buy, Stocks to Sell, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says they can't be profitable with this huge cost – it's time to move on. Here's a revelation. The airline industry is disappearing right before our eyes. And it doesn't even matter. They can merge all they want, they can try to cut costs through synergy, but the business can't survive $120 oil. The variable cost is 35% of their expense. That's not tenable and it is going higher. Fares have to double to make it up. That's just not tenable. The Dreamliner's a nice savings, but this American industry won't get there in time to be saved by it.
Last week we saw the big give-up, the departure of even the longest-term investors. The stocks are signaling that most of them will have to restructure through bankruptcy. They have done it before, but this time it doesn't matter. The fare increases have to occur, and they are such that the airline structures can't be profitable. It is one of those industries that can't stay afloat without massive federal subsidies, and that can't happen.
I have hated the airline stocks ever since 1985 when I recommended
Delta (NYSE:
DAL) (
Cramer's Take) and my clients promptly dropped 50%. I reiterate that after the tremendous declines these stocks have, they are still worth avoiding. Don't be tempted to pick up these stocks if oil "swoons" down to $115. The airlines will rally, but they will need to do every bit of financing possible if a rally occurs.
Continue reading Cramer on BloggingStocks: Airlines can't survive oil at $120
Posted Apr 28th 2008 9:05AM by Jim Cramer
Filed under: Market matters, Chesapeake Energy (CHK), Wrigley, (Wm) Jr (WWY), Anadarko Petroleum (APC), Oil, Stocks to Buy, Cramer on BloggingStocks
TheStreet.com's Jim Cramer says it's not a strong-dollar sell -- the story here is still too good.Why did natural gas go down last week? What was that? Inventories were down. The commodity price was up. The fuel itself is green. It is better than ethanol and it is being used to fuel an increasing numbers of cars and trucks.
The whole move down had to have been triggered by something, right? Yeah, how about the fact that the stocks were up a lot and were due for some profit-taking.
Recall that the real "reason" they went down is that the dollar "got strong," and that was supposed to trigger commodity deflation; natural gas is a commodity and is therefore going to go down. (Barron's made this very case this weekend, oblivious to the facts, but loving the theory.)
This kind of thinking is just so stupid that it shows you can get chance after chance after chance to own the fuel that can take care of the nation if we just let it. Of course, the stocks began to come back later in the week as threats of supply cut-offs of crude -- they came true this weekend -- made natural gas declines virtually impossible, despite the "sense" that it peaked. So the money has came back and I believe will continue to come back.
Continue reading Cramer on BloggingStocks: Nat gas dip was profit-taking, nothing more
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Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
