The Cramer Report
Monday July 10, 2006

Friday's Recap:

Defensive stocks can make you some Mad Money come monday, and Jim recommends PepsiCo, Inc. and Genentech, Inc.

Aggresive plays include AAR Corp. (AIR)  and Alcan Inc. (USA) (Jim owns this one.for the trust).

When the market is crap, defensive stocks will hang tough.

Diversification is the key, Jim recommends food and drug stocks.

Pepsi's dividions should have better than expected earnings.  
The FDA recently approved Genentech's Lucentis drug.
Earlier this week, Jim blessed Alcoa Inc.  He said to hold off and get into Alcan as it is more of a "legitimate takeover company".

AAR reports it numbers on Monday.

The Other, Other White Meat

Smithfield Foods is mean company.  The like to make money, not friends.  As Jim put it, they like to kick thier competitors when they are down.  The pork company recently bought Sara Lee because they were in a tough spot and got the copmany for $300 million less than the originally had planned.  They also bought  Cook's Ham for $260 million.  However, the company had $330 million is sales last year.  The parent company, Con Agra is in trouble and if that keeps up, Smithfield could buy Con's other divisions for less than it is worth.

The Yin and Yang of The Market

J.C. Penney Company, Inc. and Abercrombie & Fitch Co.

Recently, J.C. Penney reported great numbers.

Abercrombie & Fitch came out with 4% decrease in same-store sales.

Guess which stock went down?

Wrong.  JC Penny's stock fell becuase
it's all about expectations.  And their 'upside' had already been priced into the stock.  Cramer feels it is a great stock, but...

A&F had been shorted by alot of people and when they reported, the shorters panicked.  The value investors held on, and they will.  Cramer feels this is a value stock.  One factor which adds to it's value is that Hollister, one of their franchises, is the "biggest force in teen retail," he said.

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