Segment 1: The Banks Are Back
Cramer thinks that the market is getting ready for its next move higher, and that it will be led by the banks because they are getting stronger. He gave 10 reasons why the banks are back:
1. Credit losses are peaking.
2. Financial reform is dead.
3. Citigroup (C) CEO Vikram Pandit’s testimony to Congress eliminated the risk of bad headlines from Washington.
4. Banks are raising capital.
5. Banks want to raise their dividends.
6. Commercial real estate is coming back.
7. Large bank failures are declining.
8. The banking sector has been underperforming.
9. Consumers are spending again.
10. Unemployment has peaked.
Cramer ended by saying that he hopes there is a pullback in the banks to give investors a buying opportunity, and that the time to buy is when the Fed thinks they can raise rates without killing the sector.
Segment 2: Go With the Flow
Cramer said that he generally looks for investing ideas that go against the grain of Obama’s agenda, but he now has a recommendation that is both pro-Obama and anti-Obama at the same time. The stock is McDermott International (MDR), and he is bullish because it is splitting itself up into 2 companies, which should unlock about $5 - $7 of value in the stock. The company will split into Babcock and Wilcox and J. Ray McDermott in the second half of this year. Cramer said that Babcock and Wilcox is the pro-Obama, anti-natural gas play that makes clean coal systems and natural gas generators, and it has a backlog of $4.6 billion, which is almost as much as MDR’s current market cap. J. Ray McDermott will have the offshore drilling rig business and pipeline business, it does 90% of its business outside of the U.S., and has a $3.9 billion backlog. He said that he doesn’t like MDR much right now, but he likes both of these companies individually, so you should buy MDR, wait for the split, and then decide if you should be for or against Obama’s agenda.
Segment 3: Time for Coal?
Cramer said that people are undecided about whether investing in coal is a good or bad idea, and he explained that utilities are switching to natural gas, but demand for the type of coal used to make steel is in high demand because China has gone from a net exporter to a net importer of coal, and Joy Global’s (JOYG) quarterly report on March 3 confirmed Cramer’s research. He thinks the best way to play this trend is to buy a stock that is a pure play on metallurgical (met) coal, and he recommended Walter Industries (WLT). WLT gets 90% of its income from met coal, is expected to have higher volume growth than its peers, has low shipping costs because they are close to Mobile, Alabama, it has 60% of its 2010 production un-priced to take advantage of higher prices, it has a great balance sheet, and the stock is cheap. He said to buy some now, and then wait for the Chinese to raise interest rates and WLT to pull back before buying more.
Segment 4: Lightning Round!
THQ (THQI): Cramer is bearish on this stock because he doesn’t like the traditional video game sector, and he said that he would rather own Elecrtronic Arts (ERTS) because of their social gaming business.
Incyte (INCY): Cramer is bullish on this stock as a speculative play.
Saytam Computer Services (SAY): Cramer would rather own Cognizant Technology Solutions (CTSH).
Monro Muffler Brake (MNRO): Cramer is bullish on this stock, even though GM is expanding its dealer network.
Tyson Foods (TSN): Cramer said that he already missed the move in that stock, so it is too late to get in it now.
Gastar Exploration (GST): Cramer is bullish on this stock.
Corning (GLW): Cramer likes this stock, but he said he likes Cree (CREE) more.
Netflix (NFLX): Cramer is bullish on this stock because of their great growth rates.
First Niagara Financial (FNFG): Cramer is bullish on this stock, and he added that he still likes Huntinton Bancshares (HBAN) also.
Radian Group (RDN): Cramer is bearish on this stock because he doesn’t like the mortgage insurance business and the stock is up big already.
Segment 5: Am I Diversified?
Cramer reviewed caller portfolios but didn't make any specific stock picks.
