| Word On The Street - Wall Street |
| Jim Cramer believes some stocks are consistently bad |
| by Philip D. Gibbons |
| Yogi Berra once said, “you can observe a lot by watching”. Sometimes, I get that feeling while viewing Jim Cramer’s “Mad Money”. Cramer can be maddeningly inconsistent at times, but there are certain stocks that will always elicit the same manic disdain, especially during the “Lightning Round”. Last week there were whole industry groups that got the thumbs down in a very consistent and permanent way. |
The first sector to get bashed was the traditional large cap pharmaceuticals which Cramer mentioned specifically. A caller brought up Pfizer (PFE) which is a perpetual Wall Street insider pick on a value basis to turn itself around. This stock has been beaten down for years and the conventional wisdom is that it has to improve at some point. But Cramer not only disdains this company, he routinely tells callers to sell out of this as well as two other large cap drug companies; Bristol-Myers (BM) and Merck (MRK). Cramer is much more enthusiastic about more cutting edge firms like Genentech (DNA) and endorses only one pharmaceutical giant, Shearing-Plough (SGP). Beware, though, Genentech isn’t cheap at this point selling for $95 a share.
Cramer’s enmity is not just reserved for large cap dinosaurs from yesteryear, he also lights into former momentum stocks from the high tech frenzy of the late nineties. When a caller brings up Cisco (CSCO) Cramer explodes with scathing derision and disaster sound effects denoting this issue as a “House of Pain”. For good measure, he tosses in Dell (DELL) and Sun Microsystems (SUNW) as an unworthy trio that should be ignored in favor of high tech stocks that are on the way up and not treading water.
And God help those that even mention the dreaded words “General Motors” (GM). Cramer doesn’t even get into the usual banter and regional nicknames. He practically has a seizure and cuts off the caller and screams “GM!!!” repeatedly in the most derisive of tones. Like a mad scientist, he practically demands that the caller swap out of General Motors and buy Toyota, TM, another stock that gets a constant thumbs up. Then Cramer gets within a few inches of the camera, his face filling up the television screen and his voice shouting out: “DON’T YOU LIKE MONEY !??!?!?” causing me to chuckle at what passes for entertainment in our attention deficit age. But I do take away some constructive input from these diatribes, namely that you don’t buy or hang on to these stocks in the misguided hope that they will come back. Get out or don’t buy them to begin with.
Cramer’s twisted sense of humor can also rear its head at the most unlikeliest of moments. When a caller mentions that he is from Bethlehem, PA, Cramer pauses thoughtfully and says “Oh, yeah, I spent a lot of time in your town checking out that huge steel mill. After taking a close look, I decided that the best thing to do with it would be to turn it into a Dave and Buster’s!” Not exactly a ringing endorsement of American industrial infrastructure when Jim suggests that a hallmark of the steel industry should be transformed into a giant sports bar.
On a more serious note, Cramer got on record as saying that energy stocks had peaked no matter what oil and natural gas prices did in the short term. He was a lot more bullish on the oil servicing companies like Schlumberger (SLB) and Williams (WMB), saying that margins for energy extraction will only increase with the frenzy to get the stuff out of the ground. We’ll see.
Cramer also touted JP Morgan-Chase (JPM), saying a new CEO had a record of cost cutting that would fit right in once the Fed stopped raising rates and bank stocks benefited as an industry group. A foreign manufacturer of jewelry, Anglo-American PLC, (AAUK) also gets an endorsement. Reviewing last week’s stocks, Seagate Technology (STX) was flat, Laureate (LAUR) and Royal Bank of Canada (RY) got a bit of a Cramer bump before selling off. Let’s check where they are a month from now.
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