Tuesday, November 13, 2012
Don't Let Politics Get Your Investing Down
It's politics, not principles, that are keeping our country from moving forward, Jim Cramer told his "Mad Money" TV show viewers Monday, as he demonstrated multiple ways the stock market could be making investors money, if only they weren't too scared to invest.
Cramer reminded viewers that the looming fiscal cliff is a manmade problem, one that could be solved by locking our congressional leaders in a room and forcing them to hammer out a compromise. Until that happens however, the things that are going right in the markets are being largely unnoticed, he said, as investors head for the exits and lock in gains before year end.
Some examples include Gilead Science (GILD) and Celgene (CELG), two biotech stocks that rose 13.7% and 5.8% in Monday's trading on the heels of positive trial data on their drugs.
Cramer noted that today's news was not hard to find, as Celgene's CEO said good things were coming this fall when he last appeared on "Mad Money."
Then there's paint-maker Sherwin-Williams (SHW), whose shares soared 5.7% on the news it's acquiring Mexican paint-maker Consorcio Comex. Precision Castparts (PCP) also saw its shares rise 4.8% on the news its acquiring Titanium Metals (TIE). Titanium Metals' shares jumped 42% on the deal.
The list goes on, said Cramer, including a 14% pop in shares of Jefferies (JEF) on another takeover deal.
What do all these gains mean? Cramer said it means bold companies will take advantage of market's cheap stock prices to make deals happen and investors need to be paying attention. Some deals are simply too good to pass up.
The Gift of Holiday Retail
With the holiday shopping season upon us, many investors are looking to add a retail stock to their portfolios. Cramer said they need to be careful however, as retail this year has been a very hit-or-miss affair.
While some retailers, like Wal-Mart (WMT) have seen their stocks soar since April, others like J.C. Penney (JCP) are in a serious decline. That's why Cramer once again recommended Ascena Retail (ASNA) as one of the safer ways to play the retail trade.
Cramer said that Ascena remains a terrific story. The company maintains a stable of diversified stores including Justice for teens and tweens, Maurice's for women in the 20s, Dress Barn for middle aged shoppers and the company's recent acquisition of Charming Shoppes gave it Lane Bryant and others to tackle the plus-sized market.
Cramer said that Ascena's diversification of its brands is perhaps its largest strength, as each concept has little to do with the others. Yet all of Ascena's stores focus on customer service and relationships, something that never goes out of style.
Trading at just 11 times earning with a 15% long-term growth rate, Cramer said Ascena remains one of his favorite value-oriented retail stocks and he would be a buyer going into the holiday season.
Improvement in China
There are three things weighing on our markets, Cramer told viewers: Europe, the U.S. fiscal cliff and a slowing China. But at least one of those things is starting to improve, he said, as recent macro and micro-economic data have shown, the Chinese economy may have bottomed.
On the macro side, Cramer said there's been a slew of data showing China is improving. Chinese exports are at a five-month high, he noted, which still makes their economy far from great but certainly better than most people think.
He said the Chinese have only cut interest rates twice, leaving lots of room for further action. But more importantly, China has been directly injecting cash to stimulate growth, a plan that's now working as the country's retail sales, purchasing manager's survey and even iron ore prices are starting to climb.
There's also positive news from individual companies, Cramer said, as Caterpillar (CAT), Eaton (ETN) and Alcoa (AA) have all signaled that 2013 is looking better than 2012.
With the new Chinese leadership highly incentivized to get things moving quickly, Cramer said he'd play China with the iShares FTSE China 25 (FXI) ETF, which represents a basket of high-quality Chinese stocks from materials to telecom. Best of all, the FXI pays a hefty 4.8% dividend.
In the Lightning Round, Cramer was bullish on Toro (TTC).
Cramer was bearish on Choice Hotels (CHH), Marvell Technology (MRVL), Alcoa (AA), Stratasys (SSYS) and MarkWest Energy Partners (MWE).
In the "Executive Decision" segment, Cramer once again spoke with David Demers, CEO of Westport Innovations (WPRT), a natural gas engine maker that's doubled since Cramer first recommended it in January 2010, but also one that's fallen 28% from its highs in August, as hopes for a quick transition to natural gas for heavy trucks faded with an Obama re-election.
Demers said it's important to realize the enormity of the industries Westport and the entire natural gas industry are disrupting. He said everything from the fuel producers, to refiners to filling stations to vehicles and engines all must coordinate in order to make natural gas a prominent surface fuel. Demers noted that while signs may not be visible to the public, things are indeed happening.
When asked about his company's lagging quarterly results, Demers characterized them as merely a pause in the transition. He said while last year was strong, the economy this year has pushed some sales into 2013. Those sales will be coming, he added, saying that the next generation of products, including a long-haul engine, will drive growth throughout next year.
Cramer fell short of offering a recommendation on Westport, continuing to express optimism for the future of natural gas as a surface fuel but noting that the transition has been riddled with delays for years.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer opined on just what it may take in order to achieve a budget deal and avert the fiscal cliff. He said there are three pressure points that could get Congress moving.
The first would be a precipitous market decline, something that would surely get their attention. Second would be a rise in jobless rates, as companies learned during the last slowdown that those who fired first survived the best. Finally, Cramer said the election itself is spurring some change, as the Republican and Democrats have both learned that doing nothing is the quickest way to to get voted out of office.
Cramer said he hopes the message of the election is enough to get things moving before the other two begin to take hold.
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