Segment 1: Game Plan
Cramer’s game plan is to buy Apple at a discount on Tuesday, because it is going to report earnings on Monday night and he thinks that a production problem with the iPhone will lead to disappointing iPhone sales for their last quarter. The issue has been solved, so it is not a long term problem. He said that AT&T (T) reports on Thursday, and they should report positive iPhone news, so there is a small window to take advantage of a pullback in AAPL. He also said that the strength of the aerospace sector will be tested on Wednesday when Boeing (BA) reports. It could be hurt if it reports more delays on its new Dreamliner plane, and he would buy it if it drops below $50 because of the high yield. We should get a look at the commercial real estate market when M&T Bank (MTB) and Comerica (CMA) report on Tuesday, Key Bank (KEY) reports on Wednesday, and Huntington Bancshares (HBAN), Fifth Third (FITB), and Capital One (COF) report on Thursday. Wells Fargo (WFC) also reports on Wednesday, which will give us an idea about the health of the bank. He said that WFC’s stock price is usually hurt after the quarterly report because the bank’s management is not very open, so there could be a buying opportunity on Thursday. Cramer then pointed out that 2 economic barometers are reporting on Tuesday, which are Coca-Cola (KO) and Caterpillar (CAT). If CAT goes up and KO goes down, then people are more bullish. If the opposite happens, then people are getting more defensive. He also wants to listen to the reports from Nucor (NUE), UPS (UPS), and Union Pacific (UNP) on Thursday to find out about the state of the U.S. economy. Also, Deckers Outdoors (DECK) reports Uggs sales on Thursday, so he would buy that stock on Wednesday, and Fortune Brands (FO), Whirlpool (WHR), and Amazon (AMZN) report next week, and Cramer would like to listen to their conference calls to get an idea about the housing market and retail.
Cramer took phone calls on the following stocks:
American Tower (AMT): Cramer recommended this stock as a play on increased wireless demand and a need for the wireless carriers to keep upgrading their networks. He said that SBA Communications (SBAC) is also a good stock in that sector.
Triquint Semiconductor (TQNT): Cramer is bullish on this stock, and said he likes RF Micro Devices (RFMD) in that group.
Segment 2: Mobile Internet Index Update
Cramer said that Cisco (CSCO) reached an agreement to buy Starent Networks (STAR) on Tuesday, so he had to find a new internet tsunami stock to replace it. The replacement stock is ARM Holdings (ARMH). ARM has a 95% market share in mobile phones, and focuses on the mobile phone and smart phone market with its products. The company is a semiconductor intellectual property licensing company, so it doesn’t actually produce anything, but the licenses for its designs are much cheaper than what manufacturing companies would have to pay to replicate their designs, so there is a lot of demand for their product. Also, they have little competition. Cramer said that regular phones have 2 ARM based processors, but smart phones have up to 5, so it is a good smart phone play. Also, ARM is entering the netbook market because of its low power designs that have similar performance to Intel’s (INTC) processors. They also have a partnership with Google (GOOG) to work on its Chrome operating system. The stock looks expensive at 25 times earnings and up 101% from its lows, but it is growing at a 30% rate, so Cramer is bullish.
Segment 3: Homeland Security Week, Part 5
Cramer ended his week long look at homeland security plays by recommending two biometrics plays. The industry is expected to grow at a 19% rate for the next 8 years, and the growth is not dependent on the strength of the economy, so these stocks are popular right now. Cramer’s favorite stocks are L-1 Identity Solutions (ID) and Cogent (COGT). COGT is a play on fingerprint biometrics, and gets half of its sales from the U.S. Visit program. ID is a more diversified biometrics and security play, since it gets 21% of its sales from biometrics and the rest comes from more consistent businesses like ID and driver’s license printing. ID has a backlog of $1.1 billion and is working on several new major contracts, while COGT is growing with the U.S. Visit program, and has some other new contracts with the U.S. Census, the Army, the U.K. post office, and the Belgian government. COGT has a very good balance sheet, and ID is improving theirs. He said that he recommends both of them as a speculative play, so you need to decide whether you want a pure biometrics play or not, and if ID’s weaker balance sheet is too risky for you. He reminded everyone to use limit orders, and to be patient because there is no reason to pay up for either stock.
Cramer took phone calls on the following stocks:
Force Protection (FRPT): Cramer is bearish on this stock because they lost a major contract, and he is not sure if they can recover.
Segment 4: Lightning Round!
Vivus (VVUS): Cramer said this is OK as a speculative stock, but he would recommend something like Celgene (CELG) as a non-speculative play.
Rubicon Minerals (RBY): Cramer is bearish and recommended Freeport McMoran (FCX) or Agnico-Eagle Mines (AEM) as better mineral plays.
Skyworks Solutions (SWKS): Cramer is bullish and thinks that they will report a great quarter.
Cerner (CERN): Cramer said to take profits ahead of the quarterly report because expectations are so high and the stock is up 100% from its lows.
Imax (IMAX): Cramer is bearish, but he has been bearish as it went up to $8.
Blackstone (BX): Cramer said “Don’t buy” because the company is not transparent enough.
Eli Lilly (LLY): Cramer is bullish on this stock because it has a safe 5% yield.
Neutral Tandem (TNDM): Cramer said he has to do some homework to find out why the stock is down, and come back to it later.
3Com (COMS): Cramer is bullish on this stock because it is cheap.
Segment 5: Mad Money Mail
Hatteras Financial (HTS): Cramer said this company has a dangerously high 16% yield and is in position to get hammered if the Federal Reserve raises rates in the next couple years, so he is bearish.
Diodes (DIOD): Cramer is bullish on this stock, but he likes ON Semiconductor (ONNN) better.
