Segment 1: What Does the Market Want?
Cramer said that our stock market is now tied to the European debt markets because hedge funds sell and short everything when there is a threat of a collapse in a European country, and the market rallied today because it looked like the EU is going to make sure that Greece doesn’t default on its debts. He said that this good news was even able to overcome the trend of market declines when Obama speaks on TV. He also said that a weaker dollar, a rally in oil, and a rise in copper prices are seen as good news by the market, even though all of these things are bad for the economy. A weaker dollar is seen as a way to get higher profits for U.S. companies, higher oil is seen as a sign that economic activity is picking up, and higher copper is seen as a sign of strong demand in China.
Cramer took phone calls on the following stocks:
Clearn Energy Fuels (CLNE): Cramer is worried about this stock because Obama is promoting everything but natural gas as a fuel, even though he likes the CEO.
NYSE Group (NYX): Cramer likes this stock because of the yield, and said he would buy it over Knight Capital (NITE).
Segment 2: Off the Charts
Cramer said that the stock market has been stuck in a lot of short-term trends, which makes it hard for longer term traders to make decisions, and pointed to Oil Service ETF (OIH) as an example. He said that the companies in this index have been doing well because their business is dependent on the need to drill for more oil and gas in new locations, not the short-term trends in the price of oil, but technical analysts believe that sellers have taken control of OIH and will drive the ETF down to $103 from its current price near $118. He showed that ETF fell below its swing point on December 30, 2009 on higher volume, signaling that the downtrend is for real. The next swing point is around $110, but the technical analyst Cramer spoke to thinks the stock could drop all the way to $103 because there is a lot of short sellers pushing the stock down, and $103 is the bottom of its trading range over the last 6 months. If it goes through the support at $103, he thinks it will go the whole way down to $87 because that is the next support level. Cramer said that he thinks you should get out of OIH now because it is being beat up by sellers and it was up today, and he recommended buying Schlumberger (SLB) because it is the best company in the sector, but he wants to wait for a pullback because the stock is up $1.60 today and it will be dragged down by the selling in this sector.
Segment 3: Dividend Raisers, Part 2
Cramer continued his weeklong look at companies that raise their dividend ahead of their earnings report, and today’s stock is Core Laboratories (CLB), a small oil driller. He said that the stock is dependent on the price of oil futures, but he is very bullish about the company’s future because they raised their dividend 20% last month. The company’s business is helping its customers assess the size of oil pockets on land that they own and improving the yields from these assets. It gets 70% of its business outside the U.S., gets 80% of its work in the crude oil business, and has exposure to the shale regions in America. He also said that the company has a history of paying out a special dividend each year, which boosts the company’s yield to over 1%. Even though this isn’t a very large dividend, Cramer said it is good for a company with such a high growth rate, and the company has the earnings and solid balance sheet to raise the dividend. He ended by saying that he doesn’t want to buy the stock in front of the quarter because it is too risky, but he pointed it out because he wants you to pay attention to their quarterly report on Thursday and then make a decision.
Cramer took phone calls on the following stocks:
Verizon (VZ): Cramer said that the company’s dividend is safe because cash flow is growing, and the dividend is paid from cash flow. He said that the CEO explained this on the conference call, and he recommended that everyone read it to understand why the dividend is safe.
Alpha Natural Resources (ANR): Cramer said the company reported a great quarter, but he is not a fan of coal.
Caterpillar (CAT): Cramer said to wait until the stock pulls back to $50 before buying.
Provident Energy (PVX): Cramer said to stay away from the Canadian energy trusts because of the taxation scheme there, and recommended Permian Basin Trust (PBT) instead.
Segment 4: Lightning Round!
Acorda Therapeutics (ACOR): Cramer is bullish on this stock as a speculative play on treatments for spinal cord injuries.
Northern Dynasty Minerals (NAK): Cramer is bearish on this stock because he doesn’t like to speculate in Canadian precious metal miners.
Rambus (RMBS): Cramer is bullish on this stock, and said he likes Nvidia (NVDA) as well.
Synaptics (SYNA): Cramer would rather own Cypress Semiconductor (CY).
Dole Foods (DOLF): Cramer is bearish on this stock and repeated that he got this one wrong when he recommended it.
Valmont Industries (VMI): Cramer is bullish on this stock as a play on an increase in infrastructure spending.
Segment 5: Private Club
Cramer said that every time a recession ended in the last 30 years, people would move away from generic private label brands and begin purchasing brand name products again, but that hasn’t happened this time. He said that he would stay away from stocks like Diageo (DEO) and Brown Forman (BF-B) and buy private label brand maker Treehouse Foods (THS) because other private label makers like Ralcorp Holdings (RAH), American Italian Pasta (AIPC), and Perrigo (PRGO) reported good quarters last week, while Kellogg (K) disappointed, and he expects that trend to continue.
