GM’s News Today is a Mixed Blessing

If you’re the Fed chairman you’re thinking you gotta be careful and can’t send us back into a recession. By the end of the day the market faltered because you get very worried, worried about earnings when GM announces they are laying off 25,000 people. You need to sell. You need to sell: AA, X, DPH, LEA, VC, JCI – all Bears, everything with a smokestack attached to it. You have to sell them.

While you are saying goodbye to those there is still plenty to buy. You need to think about what happens as the Fed cries uncle. You can buy PG. You think that has anything to do with 25,000 people being laid off? How about Altria (MO)? How about General Mills (GIS). Cereal prices are going higher. How about NLY?

Recap: 25,000 people getting laid off (HALLELUJAH!) we like that, not because we are horrible people but because it brings out a whole new group of stocks to buy.

Q: Are GM Bonds a Good Buy?

A: I’m not going to recommend junk bonds on this show because people who reach for yield end up getting hurt. However – go out three year on GMAC paper (bonds) and you’ll get 8%. That’s the paper to buy. I don’t speak much about bonds on this show because you’ll stop watching but I do believe these represent a great buy.

Q: Should I Sell Into Rallies and Buy on Dips in Low Summer Volume?

A: We’re not in the rollercoaster market. We’re not as long as you buy the stocks that do well in a slow down. GIS is not on that rollercoaster, MO is not on that rollercoaster, no way no how is PG on that rollercoaster. Those are up market stocks, trending up. If you stick with the stuff that doesn’t have economic sensitivity you won’t have to get off every time they go up, you’ll continue to make money.

Q: What are We Going to Do With Mr. Greenspan?

A: He really should step down. He really isn’t the man for the job. He is the reason I’m begin so defensive with the stocks that I am talking about – because he is saying that he isn’t taking a break yet from raising short term rates. I’m not recommending anything that is economically sensitive on this show. Bottom line: It’s because of Greenspan that I’m recommending cereal and deodorant, not because I want to.

Decline on Sketchy Earnings May Make You Want to Sell Sears

Here’s the deal: There were only 5 weeks of Sears in the Sears quarter. The other stuff wasn’t in because Sears merged with Kmart during this quarter. People sold the stock down 13 smackers based on 5 weeks of Sears. Does that make sense? This company has got three ways to win:
1) Growth – Sears Essentials
2) Lots of overlap between Sears and Kmart. Lampert will be selling the stores that he doesn’t need.
3) Beautiful balance sheet. Lots of room to make charges, do divisions – Lampert can do whatever the heck he wants with the capital.

Are we in Sears because we are hoping that one day its going to be as good as Macy’s? We’re in it because Eddie Lampert is the foremost money manager of our generation. Buffett’s stock was at 200 in the 80’s and went to 80,000. I’m not saying that Eddie Lampert is the reincarnate of Warren Buffett. I am saying that he is the next best thing. Bottom line: Stock’s down 13, its up 120. Comes down anymore buy 1 share, comes down more, buy another. Those of you who issued the SELL SELL SELL do some homework please.

Q: Should I double down on Sears now?

A: The market is fickle and inefficient here Dale. If you’ve got a couple hundred shares now maybe buy 100 below 135, goes down to 125 you buy a little more. Let’s not be more aggressive than that because you’ve got to give it some room. Don’t be so aggressive but please stay the course.

What Should People be Buying Now?

UNH. One of my favorite companies for many years. I have seen so many jokers bet against this company for so long. It’s amazing that its constantly being recommended as a short sale. Best of breed. This morning, AARP, which is trying to figure out for its 35,000,000 members how to handle the Medicare bill, turned to UNH with an exclusive arrangement. If you are looking for something to buy that fits the profile of what to buy when the economy is getting weaker you think of UNH. That’s the stock to own.

Beating the Racket: Jim Cramer talks with Herb Greenberg, Editor of Herb Greenberg’s Reality Check, of CBS MarketWatch:

Jim Cramer: For the last three years one of the great days getting close to father’s day is a buy of JOSB. Are you on board or not pal?

Herb Greenberg: For the past years I’ve raised warning flags and the stock has doubled. Hmm.. Actually, no I’m not on board. The company had some very good earnings, they raised estimates.

Jim Cramer: Inventories lean, you usually like that.

Herb Greenberg: They say intentional inventory build. It’s almost a full year, that’s double the inventory of Men’s Warehouse, their direct competitor.

….

Herb Greenberg: I heard from the CEO Bob Wildrick, JOSB CEO, earlier today. He’s one of the few guys that either calls me back or calls me out of the blue, even when I write something negative. I like that. He truly believes in his company. He went through all of these points I raised including the inventory and says, look I’ve got to have inventory on hand because not only am I opening these stores but we also are our own manufacturer. That means we have to have 4 months of our stuff in stock. He’s going to open stores for another three years he says.

Jim Cramer: Maybe in 2008 we ought to sell.

Herb Greenberg: I actually do a lot of soul searching on these type of companies. Here’s the deal: He’s performed. Bears around the stock have been wrong. I’ve had a lot of guys tell me, “Herb, forget the warnings signs, we’re performing. These warning signs are because we’re growing, don’t pay attention.” Every single time I’ve said okay, the guys a great guy – I just don’t write the story I either look like a fool or it’s a missed opportunity. I basically come down to the fact that I put it out there, investors can decide. There are a number of red flags flying over this company: Operating Cash flow going down, earnings going up. He says its because we’re opening new stores, if we stop opening new stores our OCF will go through the roof. He’s probably right, he may be right but in the end I can’t see the future here. But I do think that as long as Wall Street likes the story, typically the stock goes higher but still I fly the red flags.

Jim Cramer: My take on this is that I don’t like to see the inventory build. In the interim do you mind if we make a little money on JOSB while he frets? BULL. Yeah, that’s what’s going to happen.

Gwyn Morgan, EnCana CEO joins Jim Cramer:

Cramer: How much more valuable is your company as natural gas goes up or as oil goes up than it used to be? Some companies are more levered to different commodities.

Morgan: We are very levered to natural gas, over 80% and we’re the largest natural gas producer in North America and we have the largest base of Natural Gas resources in North America so that positions us very well in that space obviously. We have 10 trillion cubic feet of proven natural gas reserves and about another 20 trillion that are unbooked resource potential on what you call real estate holdings in Canada and the United States. That all adds up to about 30 TCF so I guess if it moves by a dollar an MCF that amounts to about 30 billion dollars and change.

Cramer: Huge levered. Huge.

Morgan: We are the largest driller in North America. We drill more gas wells than anyone else in N.A. We are a driller. Here in Colorado we are the fastest growing and one of the largest gas producers and drillers. In East Texas, Wyoming we are a big player and of course we are the largest player by far in Western Canada. All of it adds up to a big position in resources and resources are the big thing here as you know.

Cramer: Now, do you have some overseas stuff that you are still saying raising some cash?

Morgan: We’ve sold our interest in the U.K. We just finished selling our interest in the deep water Gulf. We are focusing on onshore – onshore unconventional resources. We’re in the process of selling our interest in Ecuador. After that we’ll be focusing exclusively on North America.

Cramer: If you don’t understand how big and powerful this company is. This is one of those companies that nobody knows. I’ve been talking this company for two years. This is the Saudi Arabia of natural gas. As much as I like real estate I love natural gas. When natural gas goes up you should be thinking ECA.

Q: How would you play the current lack of refining capacity?

A: Great question. If oil goes up huge the company to buy is COP. If natural gas goes up huge the company to buy is ECA, then secondarily I buy CHK where the insiders are buying hand over fist. If you think the refining margins are going to expand then you buy VLO. The bottom line is VLO is really, other than TSO, my favorite refiner play but I like nat gas cause that’s still too low. Encana’s for me.

Need to get you thinking the way I do

New York Times yesterday has an article – the government is cutting back seriously on financial aid. You need be thinking how can I make money off this bad news? Bad news for parents and their kids is good news for Sallie Mae (SLM) and Student Loan Marketing (STU) and First Marblehead (FMD). SLM and STU are the two biggest players in the private loan business. FMD gets me going – it’s the levered play to having more loans. You see its been cut in half, selling at 14x earnings. Financial aid, down down down, FMD up up up. I think its undervalued. The problem with the stock is only that people have given up because it lost a customer last month. Bottom line is that SLM may have better growth but FMD is the exciting one.

Disclaimer: I AM NOT JIM CRAMER. I sometimes write the summary in first person because my brain doesn't quite move fast enough to process and type at the same time, so please excuse that. This blog has no affiliation with Jim Cramer, CNBC, or Mad Money. If you'd like to contact Jim Cramer email him at madmoney@cnbc.com, or call 1-800-743-CNBC. This summary is done for you and I to be able to better track and follow Jim Cramer’s comments. The show goes by quickly so I try and catch as many keywords as possible for each stock because of this, ACCURACY IS NOT GUARANTEED but is however strived for.

NOTE: I've added today's closing price to each of the stocks listed below.

AA - 27.28 - Alcoa Inc. - You need to sell this
X - 38.64 - United States Steel Corp. - You need to sell this
DPH - 4.58 - Delphi Corporation - You need to sell this
LEA - 37.04 - Lear Corporation - You need to sell this
VC - 6.81 - Visteon Corporation - You need to sell this
JCI - 57.12 - Johnson Controls, Inc. - You need to sell this
PG - 55.45 - The Procter & Gamble Co. - You can buy this
MO - 67.78 - Altria Group, Inc. - You can buy this
GIS - 51.05 - General Mills, Inc. - You can buy this
NLY - 19.16 - Annaly Mortgage Management - You can buy this
SHLD - 141.5 - Sears Holdings Corporation - Keep buying as it comes down - see comments earlier in the show - BULL
TXN - 27.28 - Texas Instruments Incorporated - Get in MOT instead. Better management than TXN
UNH - 51.71 - UnitedHealth Group Inc. - BULL - Best of breed - the stock to own when the economy is getting weaker.

The Lightning Round:

LGF - 10.9 - Lions Gate Entertainment Corp. (USA) - I underrated this when I first started. I was wrong. Now I'm a BULL.
HD - 40 - Home Depot, Inc. - I like LOW even more. I think it has more room for expansion.
LOW - 59 - Lowe's Companies, Inc. - I like LOW even more. I think it has more room for expansion.
PETM - 32.28 - PETsMART, Inc. - What's not to like. BULL
CYPB - 12.66 - Cypress Bioscience, Inc. - Let me review my rules for biotech. DNA, then DNA, then DNA
DNA - 79.66 - Genentech, Inc. - BULL
DUK - 27.86 - Duke Energy Corporation - BULL - like DUK
MSTR - 51.11 - MicroStrategy Incorporated - No. Ring the register - BEAR - that ones not for me. Cognos could be MSTR a week ago.
LEA - 37.04 - Lear Corporation - That is not the stock. BEAR
JCI - 57.12 - Johnson Controls, Inc. - You don't want to be in this
PPG - 65.32 - PPG Industries, Inc. - You don't want to be in this
VC - 6.81 - Visteon Corporation - You don't want to be in this
DPH - 4.58 - Delphi Corporation - You don't want to be in this
CRDN - 22.44 - Ceradyne, Inc. - No. This is a 2000 2003 stock not for me. BEAR
AMGN - 60.2 - Amgen, Inc. - Poor man's DNA. I want you in DNA
HUG - 27.92 - Hughes Supply, Inc. - Think its been epoxied to 27 - BEAR - not for me
BOOM - 41.92 - Dynamic Materials Corporation - No. Small float, had a very big run. Ring the register.
CELG - 39.78 - Celgene Corporation - BULL - I think CELG is good but not as good as DNA.
WL - 35.73 - Wilmington Trust Corp. - Very good boring stock - BULL
CMA - 56.48 - Comerica Incorporated - Very good boring stock - BULL
PNC - 54.75 - PNC Financial Services - Very good boring stock - BULL
NCC - 34.2 - National City Corporation - Very good boring stock - BULL
ARG - 23.97 - Airgas, Inc. - I always like ARG - BULL - only cyclicals I'm willing to bless
PX - 46.94 - Praxair, Inc. - Only cyclicals that I'm willing to bless
IMAX - 9.49 - IMAX Corporation (USA) - BULL - I'll embrace it if its only 20% of your portfolio, the non retirement portion
LSCP - 33.24 - Laserscope - I like it - I like ELOS even more
ELOS - 34.07 - Syneron Medical Ltd. - Don't be dissuaded by the news today - like it more than LSCP
ACO - 19.2 - AMCOL International Corporation - Look at Mineral's Technology I like it even better
MTX - 67.67 - Minerals Technologies Inc - Like it better than ACO
ALKS - 11.34 - Alkermes, Inc. - Once talked this up on a previous show, didn't do a thing BEAR not interested in the stock anymore
HDI - 48.82 - Harley-Davidson, Inc. - Didn't like what the guy I had on had to stay, ring the register - I'd take profits in the stock
TKP - 44.57 - Technip (ADR) - We like that company - I don't care that its from France. What to do I care if it goes up?
ADP - 43.71 - Automatic Data Processing - BULL - like it - they make money on the float so you can raise numbers when the Fed raises rates
CMVT - 24.85 - Comverse Technology, Inc. - Cheap stock - BULL - like the company, don't understand why its been stock in this range
CREE - 26.9 - Cree, Inc. - I don't want to own that. I'm a best of breed guy. INTC
INTC - 26.86 - Intel Corporation - Best of breed. BULL
AMRI - 13.08 - Albany Molecular Research - BEAR - too speculative come on man
SRVY - 14.33 - Greenfield Online, Inc. - BEAR.
THC - 12.05 - Tenet Healthcare Corporation - Don't like at all. Dive. You could own HCA instead.
HCA - 54.2 - HCA Inc. - BULL
WY - 65.41 - Weyerhaeuser Company - Terrific both as lumber and as a real estate play. Two thumbs up for me BULL
WMB - 18.67 - Williams Companies, Inc. - Cash it in, I like DYN more. Even starting to warm up to Calpine which I thought I'd never say.
AIG - 55.23 - American International Group, Inc - BULL - It can schnitzel its way to 60 now that we're clearing up the management problems. I think overall problem will be stopped at less than 5 billions, 100 billion company you are okay
UPS - 73.02 - United Parcel Service - BULL - Stuck. Need to see a second good quarter. Christmas was so bad for them that nobody believed the last good quarter. That's a mistake and you want that deal to close. Once the deal closes that will go up.
RPM - 17.82 - RPM International Inc. - BULL - We should be making it national RPM week. Doesn't get talked about enough.
CME - 244.85 - Chicago Mercantile Exchange Holdings - Let's be careful. Number bump from last week has moved stock to the stratosphere. We want to be buying it in the atmosphere at $220. BULL
TASR - 11.06 - TASER International, Inc. - SELL SELL SELL SELL SELL SELL SELL SELL SELL SELL
KMG - 71.92 - Kerr-McGee Corporation - Yesterdays story. Already wrecked its balance sheet because of Carl Icahn. Stay way.
PWAV - 9.52 - Powerwave Technologies, Inc. - I have Symbol technology stock from hell. Don't get me in that one. Actually don't lump it in with symbol because it’s at a 52 week high, that's not fair.
UTX - 107.03 - United Technologies Corporation - BULL - what's not to like. Split coming up, really good management I like that.
NWS - 16.79 - News Corp Deleware Cl B - Waiting for overhang to clear off. Once it does its going to go from 16 to 20
PEP - 55.9 - PepsiCo, Inc. - BULL
KO - 44.11 - The Coca-Cola Company - Ring the register
TRI - 52.83 - Triad Hospitals, Inc. - Ring the register - nice call but move back into HCA
MON - 61.63 - Monsanto Company - BULL - good company, I like better living through chemicals.

ECA - 36.25 - EnCana Corporation (USA) - This is for me. See comments earlier in show.
JOSB - 40.74 - Jos. A. Bank Clothiers, Inc. - Bull - see talk with Herb Greenberg earlier in the show.
STU - 223 - The Student Loan Corp. - Government cutting back on financial aid is good for this company
SLM - 49.2 - SLM Corporation - Government cutting back on financial aid is good for this company
FMD - 35.44 - The First Marblehead Corporation - Government cutting back on financial aid is good for this company. This is the levered way to play the trend. See Cramer's comments earlier.
mortgage calculator