Segment 1: Cramer's Housing Plans
Cramer said that the market was up big because of the good housing news until layoff reports from Home Depot (HD) and Caterpillar (CAT) brought it back down close to where it opened. He thinks that this is a sign that his June 30 target for a bottom in housing is still possible, but the government needs to make sure existing home sales are encouraged with a tax credit, and that they make sure unemployment is decreased. He also hopes that the Fed will keep rates low by continuing to buy mortgages and keeping their target rate low.
Cramer took phone calls on the following stocks:
Home Depot (HD): Cramer said that their plans to lay off employees is a good one for the company, and that he is bullish as long as you buy in chunks as the stock drops.
Segment 2: Restaurant Day
Since the restaurant sector is looking better now, Cramer is recommending two restaurant stocks in this segment. He likes Darden Restaurants (DRI) and Brinker International (EAT) for the following reasons:
1. There isn't any bailout money going to this sector, so only the strong companies will survive. These two companies are in better shape than their competitors, so DRI and EAT can take advantage when they fail.
2. The decline in commodity costs has helped cut their raw costs, increasing their margins.
3. These companies are able to retain top management since their competitors aren't around to poach their talented employees.
4. The weak economy has lowered advertising costs, which makes their national campaigns cheaper and easier to obtain.
5. These companies offer great bargains at their restaurants, which bring in customers and make them more loyal.
Cramer also likes that both stocks are cheap, but said to wait for a pullback before buying either one because they were up big last week.
Cramer took phone calls on the following stocks:
Flowers Foods (FLO): Cramer is bullish because their raw costs are way down this year.
Cheesecake Factory (CAKE): Cramer is concerned about the company because it has some debt coming due, so he said to stay away even though the stock is cheap.
Segment 3: Interview with McDonald's (MCD) CEO James Skinner
For the second part of Restaurant Day, Cramer said that McDonald's is his favorite restaurant stock because it is so well run, which was proven by the great numbers they reported this morning. He also thinks that a strengthening dollar won't be an issue as other countries cut rates to get their economies out of a recession.
Cramer: How did you deliver the good results announced today?
Skinner: We executed on our operating plan because of our quality employees and years of experience.
Cramer: What good things do you have planned for shareholders?
Skinner: We are on track to return $15 - $17 billion to our shareholders by the end of 2009 as planned, and we will determine what our next target is later this year. We will continue to have the resources to pay our dividend and grow the company.
Cramer: How do you keep your prices competitive with cooking at home?
Skinner: We haven't taken as many price increases as we have in the past because of decreasing commodity costs, and we make sure we have value in every product on the menu.
Cramer: How are you doing in Russia?
Skinner: They had sales growth over 10% in the 4th quarter. They did have some inflation in food costs, but we overcame it with higher sales.
Cramer: What about Germany?
Skinner: We have many opportunities there, and plan to continue to grow in that country, along with every other country in the world.
Cramer: Why is coffee so important to McDonald's?
Skinner: We changed the formula in 2006, and it has been very successful. We saw a large market for coffee, and we felt like we should be competing in it.
Cramer: Do you think the downturn in Starbucks (SBUX) is related to your success in coffee?
Skinner: I don't think so. They might have grown too much.
Cramer: Do you think your budget for food costs leaves you room to overdeliver?
Skinner: We try to make conservative estimates, and we will see what happens. The lower raw costs haven't made it through our system.
Cramer said this is the best run international company in the world, and he is bullish.
Segment 4: Lightning Round!
(X):
Petrobras Energia (PZE): Cramer is bearish on any international oil stock.
Cedar Fair (FUN): Cramer is bearish because they cut the dividend, which really surprised him.
Hasbro (HAS): Cramer is bullish on this toy stock along with Mattel (MAT).
Hudson City Bancorp (HCBK): Cramer said the management is doing a great job, but he is not going to recommend a bank stock until the problems with housing and unemployment are corrected.
Shaw Group (SGR): Cramer is bearish because this was a McCain play.
Mosaic (MOS): Cramer is bearish and recommended Terra Nitrogen (TNH) because of its large dividend.
Geron (GERN): Cramer said to sell after its huge gain last week because it is too speculative.
Badger Meter (BMI): Cramer won't recommend this stock because it doesn't have a big dividend and isn't recession resistant.
Southwest (LUV): Cramer won't recommend an airline stock.
Segment 5: Outrage of the Day
Cramer is outraged that the SEC is spending its time issuing inquiries into statements related to the health of Apple's (AAPL) CEO Steve Jobs. It isn't unreasonable that he would keep the news private until all the results were in, and the company should be OK without him. Cramer liked the results they just reported, and is still bullish.
