Today we start the show with oil. Lee Ramond has retired as CEO of Exxon(XOM). Cramer brings us the next XOM. In coping with a bad day one has to find the bull in the market, and the bull right now is in oil. Cramer has long been in love with CHK and he starts the show with CEO of CHK Mr. Aubrey McClendon. Oil is the cornerstone of a diversified portfolio and this stock has been undervalued for years. McClendon has been relentless in the inside buying back of this stock. In 2004 he bought 500,000 shares of CHK and since it has gone up $6. Cramer stated he would back up the truck and buy CHK now because the company is leveraged to natural gas and if natural gas can go to $10 they would make huge money.
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Lighting Round
Bullish:
MetLife (MET), Life Time Fitness (LTM), Netease.com (NTES), “the stock is not stopping here,” Cramer said; Phelps Dodge (PD), Harris (HRS), Autodesk (ADSK), Quicksilver Resources (KWK), El Paso (EP), SanDisk (SNDK), PPG Industries (PPG), Texas Instruments (TXN), Williams Companies (WMB), Texas Industries (TXI), TXU (TXU), “the stock is going to $100,” said Cramer; Piedmont Natural Gas (PNY), Smith & Wesson (SWB), and Caremark (CMX)
Bearish:
Colgate-Palmolive (CL), Tupperware (TUP), there was nothing to like about its most recent quarter, Cramer said; WebMD (HLTH), Coca-Cola (KO), Syntroleum (SYNM), Pacific Sunwear (PSUN), Progressive Gaming International (PGIC), Liberty Media (L), “it is an absolutely terrible stock,” Cramer said; Packaging Corp. of America (PKG), Mueller Industries (MLI), J.P. Morgan Chase (JPM), “you want to own very few banks here,” Cramer said; Wind River Systems (WIND), and Boston Scientific (BSX)
Greenberg
Herb was in studio to discuss Terex (TEX) and CVS (CVS).
TEX Greenberg said wouldn’t be affected by the new highway bill until 2006. Greenberg also laid into Cramer for recommening a stock that isn’t best of breed. Caterpillar (CAT) would hold the top honor. Cramers reply was that one should not turn their head from a good trade just because it isn’t the best of breed. If one is looking for pure plays in the areas where TEX does business there are better ones to be found.
CVS Greenberg has red-flagged. The company has more debt than any of its competitors and its CEO flies on a corperate jet. Whereas Walgreens (WAG) is a better play and not only because its CEO flies coach.
Cendant (CD) was highlighted at the end of the first section of the show. Cramer ranted and raved about this company while questioning why nobody else seems to care about it. CD is growing earings at a double-digit pace and selling well below a market multiple. Cramer seemed to think, “earning could be accelerated, dividends are growing and shares are being bought back hand over fist,” right at a time when nobody cares. Now is the time to buy the stock, Cramer stating, “it will be higher a year from now.”
Loco for Latin America
Cramer’s pro-Latin America theory is proved right everyday. Business is up double digits in Latin America, yet stocks trade at a discount. Wall Street acts like these countries are still back water, communist countries.
CIB, SQM, CX, WTR
These four companies were pushed hard by Cramer. Look at investing in any or all of the four. Watch out for American owned companies that run their business out of Latin America. These companies are too cheap and too hated right now to avoid. There is too much upside to be ignored.
The countries with the least risk also were given in this order : 1. Chile 2. Mexico 3. Brazil 4. Columbia
Supreme Court Litmus Test
Cramer started the show with a little politics. Well not really, just reviewing Supreme Court nominee John Roberts portfolio. This is the litmus test for all nominees: are you diversified?
These are the problems that Cramer found in Roberts’ portfolio:
1. Too many mutual funds. Roberts was involved in 30 mutual funds. Cramer said he shouldn’t be involved in more than 10.
2. Too many stocks owned. 37 stocks owned. Pretty much his own mutual fund. Cramer owns 25 and he says with the time Roberts will spend on his stocks will he really have time to review cases?
3. Overloaded in one sector. 47.5% of his stocks are in the tech stocks the majority of which is XMSR. People should not have more than 20% in one sector.
Final points on Roberts portfolio. He has only 4% in healthcare, only a little ECA, and why no HAL, UNH or DNA?
Cramer gives Roberts a failing grade on his portfolio litmus test.
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