MAD MONEY: CRAMER FIGHTS BACK AND TALKS RIVERBED AND EBAY

Posted: August 21st, 2007 | Author: Stock Pitcher | Filed under: Mad Money | No Comments »

Jim Cramer came back Monday to the Barron’s article trashing him and his record but he was glad to see so much support from his fans and his audience. He was gracious enough to thank them and reiterate what he’s all about which is making everyone money.

REGIONAL BANK TRADE:

As his first sector trade he recommended regional banks because they should make more money as the spread grows larger when the Fed is expected to cut rates later this year. People are expect a few now so it will only benefit these banks. Cramer’s pick was KBW Regional Banking ETF (KBW). KBW has more than 50 holdings, and its five-year earnings growth is more than 9.4%.

Cramer also suggested that National City (NCC) and Comerica (CMA) were good regional banks and they were potential takeovers of regional banks.

“If you can’t get a good price, wait until it settles down,” cautioned Cramer about a buy-in to KBW. We’re buying a sector here, not best of breed,” he said, adding that this may be the “best way to play the upcoming cycle of the Fed.”

EBAY TRADE:

“I see a bargain in tech and that bargain is eBay (EBAY).” Cramer did stress that it’s “not a buy right now,” because it is trading at 21 times next year’s estimated growth.

But on the positive, Ebay has a “pristine balance sheet” and more than $3.6 billion cash on hand. In their traditional auction business, it has more than 100 million buyers and sellers worldwide while it’s slowing, they are still able to press for organic growth. One way is selling ads on their own site which generates tons of views that is being converted to ad revenue. It’s growing at 96% year over year. But they have two extreme fast growing parts of their business which is Paypal and Skype. Skype is how the world talks and it is the most popular communication tool in the business and personal world. Whether doing business in India, China, US or Europe it is the tool. As Wifi and WiMax grows, Skype will grow and advertising will be a great avenue for Ebay. Then the next global name is Paypal which is the most dominant online payment system in the world. Even the great Google Checkout hasn’t been able to make a dent. Cramer called it the online Mastercard (MA). In addition they own 25% of Craigslist which is the dominant classified online ad site in the world. I myself must admit that it’s amazing. I sold my car, found my apartment, and got my fridge all from Craigslist.

Cramer said to get Ebay below $34 which it closed just below. He reiterated that like Google (GOOG), Garmin (GRMN) and Research In Motion (RIMM), eBay is a “long-term investment play” while also a “digitalization of commerce play.”

UNITED ONLINE PICK

As a content and a traditional dial up play, Cramer spotlighted United Online (UNTD) It pays a dividend of 6% because of it’s dependable dial up revenue because amazingly dial up is still 20% of the U.S. online adult population through Netzero and Juno. In terms of content it owns, Mypoints.com and Classmates.com which the later is being spun off as a separate company as an IPO. Classmates is a social network as well as a subscription based service. Although it has a lot of cash, I have some doubts because both businesses are in the decline with dial up and classmates.com. Cramer recommended it under $14.

RIVERBED TECHNOLOGY PICK:

Riverbed Technology (RVBD) CEO, Jerry Kennelly was on the show to explain what Riverbed does which his all businesses to be able to expand their access speed connection but their new product Steelhead Mobile product extends it to laptop technology. Predicting that there will be more than 543.1 million mobile office workers by 2009, Cramer called it a buy at under $40.

LIGHTNING ROUND:

Cramer was bullish on Under Armour (UA), Crocs (CROX), Texas Instruments (TXN), Analog Devices (ADI), Intel (INTC), Consolidated Edison (ED), Deere (DE), Agrium (AGU), Monsanto (MON), Seaspan (SSW), Eagle Bulk Shipping (EGLE), General Maritime (GMR) Integrys Energy (TEG), NYSE Euronext (NYX) and Air Products & Chemical (APD).

Cramer was bearish on Atmel (ATML), Hansen Natural (HANS), Terra Nitrogen (TNH), American Electric (AEP), Akamai (AKAM) and GrafTech (GTI).

LIGHTNING ROUND HIGHLIGHTS:

Under Armour (UA): The 37% short interest in the stock is “ridiculous,” said Cramer. “This back-to-school season is going to be awesome. I know the stock is up a lot … but you know what? I am sticking by it. I think that this stock — and by the way, Crocs (CROX) — are two stocks that will go higher.”

I’ve got terrific stocks such as Texas Instruments (TXN). … I’d rather see you in Texas. I’d rather see you in, yes, Analog Devices (ADI), but more important, I would rather see you in Intel (INTC).”

Air Products & Chemical (APD): This stock was one of Cramer’s $80-to-$120 plays. “That stock is beginning to make its climb right back. I think it’s absolutely terrific. I absolutely think that Air Products is ready to go to par, or $100. I want to stick with Air Products.”

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