Segment 1: Long Live Deflation
Cramer thinks that the bullish move the market has had over the past several days is due to deflation in commodity prices, and this is good news for companies that aren't in these sectors, especially banking stocks. Also, the other companies that have increased prices to pay for rising raw costs will be able to keep those prices higher, increasing their profits. Even the threat to pipelines in Georgia hasn't sent oil prices higher, which is good for tech, biotech, health care, and the food and beverage sector. He specifically recommended CBRL Group, (CBRL), which owns Cracker Barrel restaurants, and is benefiting most from lower gas prices.
Segment 2: Bullish on Biotech
Cramer said that this sector has been strong for most of this year, and said that this will continue through the fall for 5 reasons:
1. With inflation lower now, the growth rate of biotech stocks look better.
2. Democrats love biotech.
3. They have expensive products that people are willing to pay for because they save lives.
4. There have been lots of takeover offers, and he thinks they will continue.
5. There are many medical conferences in the fall where these companies can report good news and FDA approvals.
Because of this, he is going to recommend one biotech stock each day this week, and he started with Onyx Pharmaceuticals (ONXX). He thinks this is a good takeover play for a foreign company, and they have a promising drug that extends lives by curing several rare cancers. Cramer said that the stock was hammered by an FDA rejection that caused a delay in the release of one of their drugs, but Cramer doesn't think it will affect the company much.
Segment 3: Lightning Round!
Toronto Dominion Bank (TD): Cramer is bullish on this bank.
Terex (TEX): Cramer is bullish because this stock is too cheap, but said that he likes Caterpillar (CAT) even better.
Visa (V): Cramer said that he is more bullish on this stock than Mastercard (MA) right now.
L3 Communications (LLL): Cramer is bullish on this stock.
Intrepid Potash (IPI): Cramer is bearish on this stock because fertilizer is in the house of pain.
Raytheon (RTN): Cramer is bullish on this defense contractor.
Allegheny Technology (ATI): Cramer is bearish on this stock right now.
Patriot Coal (PCX): Cramer is bearish on coal stocks because he likes natural gas as the fuel of the future.
Segment 4: Your Stock Shopping List
Cramer is going to recommend one stock a day this week that is hot because of an earnings surprise, but you need to add this to your watch list and wait for a pullback before buying. He started with Jones Apparel (JNY), which he wants you to buy at $17. They exited the department store market at the top when they sold Barney's, and they have entered into some good marketing agreements that will put numerous products in Wal-Mart (WMT) this fall. They also have a 3.1% dividend and a strong stock buyback while they increase sales and cut costs. he thinks it is a little too expensive right now, but is bullish at his target price of $17.
Segment 5: Interview with Spectra Energy (SE) CEO Fred Fowler
Cramer thinks that the market has overreacted to lower natural gas prices, unfairly punishing stocks like this natural gas transporter. Cramer asked the CEO for his opinion, and he agreed that their business won't be hurt by prices at their current level, though he said that they have a small long position in natural gas that will probably keep them from beating earnings any time this year. He added that natural gas is the cleanest fuel around, and that they will make sure that it is available where ever it is needed by transporting it through their pipeline. Cramer is bullish on the stock because of their dividend and strong cash flow.
Segment 6: Sudden Death!
General Motors (GM): Cramer is bearish because it's too risky.
Freeport McMoran (FCX): Cramer is bearish until the price gets below $75.
Ritchie Brothers Auctioneers (RBA): Cramer is bullish.
