MAD MONEY: CRAMER OPTIMISTIC AND HIS EARNINGS PICKS

Posted: August 26th, 2007 | Author: Stock Pitcher | Filed under: Mad Money | No Comments »

Jim Cramer was rather optimistic about the market as he was even “warming up to the homebuilders.” Being a contrarian, his pick of that bunch is Toll Brothers (TOL) despite the recent downgrade from Bank of America Securities.

The theme of the show was making an analogy with football players and stocks because football great Joe Theismann was on the show. Theismann, picked Monsanto (MON) as his the “franchise player” of a stock portfolio. Theismann like Monsanto because it was diversified and pays a dividend. Cramer agreed that it could be best of breed and has a solid foundation.

Like Philly Eagles’ QB Donovan McNabb, or the “comeback player,” Theismann recommended Six Flags (SIX) because of the company’s management and that it’s building eight new roller-coasters. Cramer didn’t totally agree but noted there were weather problems.

The sleeper pick Wells Fargo (WFC) because Theismann believes that it will have “deep pockets” from mortgage profits.
His “speculative player” of the portfolio, Giants’ running back Brandon Jacobs is Level 3 (LVLT), which has to prove itself, said Theismann. Cramer supported this pick as it’s the play for the new YouTube age.

Theismann compared New England Patriots’ Randy Moss who the streaky player who sizzles at times to Intel (INTC) but Cramer likes its management and said that “in the fall, it’s right.”

As defense is also important in a portfolio, Theismann likes Coca-Cola (KO), the Baltimore Ravens of the market and Cramer agreed that the stock is always there “on bad days.”

Cramer liked the portfolio, though he was concerned that both Level 3, whose debt was up recently, and Six Flags “have questionable balance sheets.”

Emerson Electric Trade

Emerson Electric (EMR) was called diversified and has global reach and exposure but Cramer said that it is NOT a “stock for all seasons,” However like Procter & Gamble (PG), the play if the Fed doesn’t cut rates fast enough, Emerson is a “great dividend stock.” After doing a two-for-one split last year, Emerson is now up 180% from its low of $33.50 seven years ago. It’s now priced at $48 with a 2.2% yield, and Cramer likes it. Emerson and P&G are the “two best in show for the S&P,” he said.

Earnings Picks

Cramer believes that consumer spending will dry up so that consumers will have to find ways to save money. For this trade, Cramer recommended Dollar Tree Stores (DLTR), a company selling lower-cost goods and Cramer expects them to have a good earnings report on Wednesday.

Cramer was unsure of Freddie Mac (FRE) who is reporting Thursday because there are too many political factors and too much uncertainty.

Cramer said that H&R Block (HRB) which reports on Thursday was sell because Warren Buffett has sold his stake in the company and Cramer does not see any good news forthcoming.

Cramer picked Dell (DELL), calling it a “best buy for next week” ahead of upgrades and said it could go to $30.

Cramer suggest that everyone watch Sycamore Networks (SCMR) and prefers it over JDS Uniphase (JDSU).

Lastly Cramer recommended Sears Holdings (SHLD), which he owns for his trust. The overall future of Sears, which will be closing underperforming stores, looks good, he said. He sees Sears going to $170 and possibly as high as $195 “if the Fed does the right thing.”

Cramer said that he liked Sun Microsystems (SUNW) at $5. He considers SUNW “a sleeper” and said the changing of its ticket symbol to JAVA doesn’t matter.

Instead of picking E-House Holdings (EJ) as a China play, he prefered Baidu.com (BIDU) and China Mobile (CHL).

LIGHTNING ROUND SUMMARY

Cramer was bullish on Goldman Sachs (GS), Inverness Medical Innovations (IMA), Deutsche Telekom (DT), Vodafone Group (VOD), Schlumberger (SLB), Exxon Mobil (XOM), XTO Energy (XTO), Halliburton (HAL), Transocean (RIG), Crocs (CROX), GameStop (GME), Electronic Arts (ERTS), Activision (ATVI), Garmin (GRMN), Apple (AAPL), Google (GOOG) and Research In Motion (RIMM).

Cramer was bearish on OraSure Technologies (OSUR) Whole Foods Market (WFMI), Lan Airlines (LFL).

LIGHTING ROUND HIGHLIGHTS:

Goldman Sachs (GS): “I think that Goldman Sachs has been bottoming between $160 and $175. I have tremendous faith that that bottom is going to hold. If it goes back down there, I want you to buy.” Cramer said CEO Lloyd Blankfein is “a great man, and I am trusting him to deliver a great number next year.” Cramer owns Goldman Sachs for his charitable trust, Action Alerts PLUS.

I’ve got Inverness Med (IMA), which is down 10 points. Nobody likes it. … I’ve been buying it for the trust. I say swap out of your OraSure and get into my Inverness.”

No, but … it’ll take off. I like Vodafone (VOD) more.”

Cramer said no to all airline stocks.

Garmin (GRMN): “Garmin can go to $120. Apple (AAPL) can go to $150. Google’s (GOOG) going to $550. Research In Motion’s (RIMM) going all the way back to par, and your stock — you hold on to it.”

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