Segment 1: Bulls on the Rise
Cramer said that the market has changed for the better as the bearish cases for 2010 have become weaker. Earnings reports have been strong, especially for the media companies, commercial real estate is remaining stable, the housing market is improving, the automakers are doing well after Cash for Clunkers, and the banks and drug stocks are moving higher.
Segment 2: Interview with International Paper (IP) CEO John Faraci
During last week’s Game Plan, Cramer told us to watch this stock because it reported earnings today. The company reported earnings that were a penny better than Wall Street expected, but the stock was knocked down 5.6% because people felt like the earnings beat was due to favorable accounting items. Cramer thinks that the market might have overreacted because the company generated a lot of cash flow, paid off debt, exports are higher, and inventories are low. Cramer wanted to find out how the company is doing. Here is a summary of the interview.
1. Cramer asked why the CEO was so disappointed with the quarter, and the CEO said that they didn’t run as well as they had hoped because of the cold weather, but he thinks the best days are ahead.
2. Cramer asked why now is a good time to buy stock in a paper company with prices rising and inventory low, and the CEO said that their business has a short lead time, so when shipping picks up like it did in December and January, they will see an improvement in business.
3. Cramer asked if they noticed an improvement in business when shipments were higher this year, and the CEO said that their volume is up a little bit, but they have been focused on selling a lot of boxes in the export market and improving their margins.
4. Cramer asked if they are still closing plants, and the CEO said that they closed 5 plants last quarter and laid off 11,000 people since June.
5. Cramer asked the CEO to explain the importance of cash flow to the company, and the CEO said that the company generated record cash flow of $2.2 billion in 2009, and they expect to beat it in 2010 and 2011.
6. Cramer asked if they will use that cash flow to pay a dividend, and the CEO said that they would like to do that, but they are conservative and will spend their money wisely, so they might not be able to pay a dividend until 2011.
7. Cramer asked if they are the best way to play corrugated boxes, and the CEO said that they are the biggest corrugated producer in the world.
Cramer ended by saying that you should own this stock because the company is in a great position and this is one of the cheapest stocks in the world.
Segment 3: Sell Block
Cramer said that this is a special edition of the Sell Block because it is based on a technical analysis report from a good analyst. Ken Schreve said that it is time to sell Seagate (STX) because the chart is showing signs of a top in the stock price. It has been in a bullish pattern since its March lows, but now the stock is going lower on higher volume, even after the company reported a great quarter. Cramer also pointed out that the analysts are too positive on the company, and he is worried that they are overexpanding right now. He said to take your profits from STX and buy Intel (INTC) instead because it has a better balance sheet, a better dividend yield, and it also reported a great quarter.
Segment 4: Lightning Round!
Under Armour (UA): Cramer is bullish on this stock because he thinks it is now cheap at $25.
Caterpillar (CAT): Cramer is bullish on this stock because he thinks infrastructure spending will be strong in the U.S. this year.
Marvell Technology Group (MVL): Cramer is bullish on this stock as a mobile internet tsunami play.
Google (GOOG): Cramer is bullish because they reported a good quarter and the stock is cheap.
BP (BP): Cramer said to sell it and wait for it to pull back to $50 because there is no catalyst to move the stock higher.
Verizon (VZ): Cramer said that the dividend is safe, but you want to stay away because of their price war with AT&T (T).
Segment 5: Am I Diversified?
Cramer reviewed caller portfolios but didn't make any specific stock picks.
