Jim Cramer Blog

There is a sharp decrease in oil prices today after Condoleza Rice held a press conference somewhat infering that the rest of the world will play ball with Iran. If Iranian talks open up, expect oil prices to continue their decline bringing the entire oil market down with them.

The bulls got slaughtered today with the worst loss in more than a month. When stocks and markets are in turmoil, a good place to put your money is in commodities. Even though gold has sky-rocketed this past year, it can go further with more and more uncertainties in the markets. A good way to get into this arena is through KRY. They are off their 1-mo highs and are set for another rally to bring the stock up to around $5. This could prove to be a good short term play until the markets stabalize.

Here are some stocks falling on unusual increases in volume:
Symb
Name
Last Trade
Change
Vol. % Change

CA
CA INC
21.45 12:45PM ET
0.71 (3.20%)
485%

ICUI
ICU MEDICAL INC
40.40 12:48PM ET
2.25 (5.28%)
278%
SDA
SADIA S.A.
24.19 12:43PM ET
2.03 (7.74%)
242%

ADRE
BLDRS EM MKTS 50
123.99 12:41PM ET
3.49 (2.74%)
236%

BCS
BARCLAYS PLC ADR
44.99 12:44PM ET
0.66 (1.45%)
236%

Oil prices surged today on lingering controversy with Iran. These surging prices are a major reason why the stock markets are down today. As these oil prices continue to rise, derivative plays also come into effect such as coal, ethanol, and alternative energy plays. Two favorites in that arena include: PEIX, and Peabody energy, both of which have come down significantly in the last month from their highs.

Sirius Satellite is up over 6% today after the announcement that the company will only have to pay 2m to resolve issues of contractual Howard Stern obligations. This issue has been suppressing this stock's value. After today's move, there could be a break out in the near future.

The Verdict of the Enron trial against Skilling and Lay further assured investors that their money is well protected in the stock market. Lay was found guilty on all counts, and Skilling got off on the insider trading counts. Officers of companies are literally scared of being put in the same situation as these two were. Let's face it, a lot of what bankrupted Enron was probably not known by the CEO. I'm sure he delegated almost all responsibility away from himself so he wouldn't have to do any work. This verdict is going to scare CEO's into making sure their company is running in the most opportune and legal way, thus further enforcing Sarbanes Oxley. This is a good thing that has happened for overall investor sentiment.

This past Tuesday, we recommended GM as a good short term buy. At that point, it was trading at $24.50. It is now trading at $28.66, which would have given you a 6% pop. It is time to sell half your position because a healthy pullback is needed for this stock to continue to rise. After the pullback, use the procedes from your sale today to buy more shares back for the long term.

Ebay and Yahoo announced today that they have formed a partnership to further both of their business on the internet. Ebay will display graphical Yahoo ads, as well as, display a Yahoo toolbar on Ebay's website. Yahoo will then make Paypal their preferred method paying for items bought on Yahoo. This is just one more step towards taking more market share away from Google. It is also a way to curb the growth of Microsoft's MSN search. I again reiterate that it is a good time to buy Yahoo considering it is also at a 52 week low.

Ebay and Yahoo announced today that they have formed a partnership to further both of their business on the internet. Ebay will display graphical Yahoo ads, as well as, display a Yahoo toolbar on Ebay's website. Yahoo will then make Paypal their preferred method paying for items bought on Yahoo. This is just one more step towards taking more market share away from Google. It is also a way to curb the growth of Microsoft's MSN search. I again reiterate that it is a good time to buy Yahoo considering it is also at a 52 week low.

As per my previous post to buy the homebuilding stocks, home sales rose 4.9% in April. These types of increases will continue to occur especially if people think that rates will continue to rise. There will start to be panic buying to lock in their low interest rate. As I have said, everyone wants to own a home, and the sweet spot to buy is just starting to end. This prime time home buying opportunity will continue for about one year and the homebuilders will reap the benefits of this last minute opportunity.

There may be a human to human infection of the Bird Flu in Sumatra. This report is unconfirmed, but if this turns out to the true, Biocryst Pharm. will run back up to its highs. They produce one of the most effective Bird Flu vaccinations.

GM has come out with one of the best ideas that I have heard a car manufacturer come up with: fixed gas prices for one year after the purchase of a new car. This has the potential to transfer huge savings on to new purchasers of GM automobiles. Expect a short term bump up in the stock price of GM, as well as, an increased optimism towards the stock for the long term. This is one more piece of news that may save this stock.

If your looking for a solid play in the stock market that can perform even with the Fed uncompassionately raising rates, you might want to consider looking towards stocks with attractive dividends. While glancing through Barron's this past weekend, I came across three companies that plan on raising their dividends.
The first company, VF Corp (VFC) @62.24, come June 19th will pay a quarterly dividend of 55 cents a share to holders of record June 7th, a 3.53% yield. Along with being an attractive dividend play, its also a good company. They are the world's number 1 jean maker and ever since their facelift in 2001 (exited underperforming businesses), they greatly reduced their cost structure. Since 2003, revenues rose 24% and earnings per share rose 26%. Gross margins expanded to 41.8% from 37.8% and cash flow rose to $1.3 billion.
The second company, Northrop Grumman (NOC) @ 67.46, while on track to acheive its fourth straight year of double-digit earnings growth, boosted its quarterly common payout by 15% to 30 cents a share. This will be dispursed June 10th to holders on record of May 31. This dividend of the world's number 3 defense contractor will yield 1.80%. Even though January-March profits fell to $358 million, they still surpassed Wall Street's expectations.
The final company, CDW Corp. (CDWC) @ 55.76, after having a series of record quarters hiked their dividend yeild for the third consecutive year by 21% to 52 cents a share from 43 cents previously. Disbursements will begin on June 30th with record date of June 14th. They are a leading provider of over 100,000 computer products to business, government and education with yearly sales of $6.3 billion. Another reason this stock is attractive is because they repurchased about $128 million worth of stock in the first quarter which is a good sign.
One final note on the dividend play, President Bush signed a bill extending reduced tax rates of 15% on capital gains and dividends through 2010 which is promising.

Sources:
Barron's May 22, 2006 edition

We have now entered into a stock pickers market. It will be impossible to determine entire sectors that will push forward. The best advice for the remainder of the week is to put your money into stocks that have already released their earnings. These stocks will have little volatility because there will not be any likely surprises. This market needs the weekend breather to kick back into wack.

Yesterday marked a huge sell-off in the homebuilding sector which fell with the rest of the market. Today, they have incrementally recovered. These stocks are at 52 week lows due to slow-downs in housing start-ups. The so called real estate bubble is not in danger of bursting anytime soon. Interest rates are still at historic lows and people will continue to want to own a home. This major pull-back is an opportunity to buy in.

Yahoo had their analyst meeting for the first time in a number of years today. As of 2:00pm, they are .50 off of the low for the day. They have released a new homepage, and improved their technology. They are in the process of making a major push towards gaining on Google's market share in the search arena. With this major decline in the market today, it is a good time to pick up a few shares of this search giant.

Today PEIX traded between 34 and 39. For those of you who wrote a call on this stock, it is a good time to buy it back. Once you buy it back, wait for the stock to trade up, which it always does, and turn around and write the May 40.

Starbucks has not only been concentrating on their rapid expansion into China, they have also been focusing heavily on the entertainment business. They are planning to be oneof the biggest cd stores with in the next few years. Will they stop here? Not likely. They have already successfully branched off into Hollywood and with stores full of music, expect to see other entertainment items such as books and dvds as well. They are expected 33% of annual sales from China in two years, which is huge, and they have an entrepreneurial management that allows great innovations. This company has so many things going for them in the future it needs to be bought while its still off its 52 week high.

Along with their partner Toshiba's $5 billion, Sandisk is investing another $5 billion in chip-making factories over the next 3 years. The flash industry has been on fire recently and is predicted to skyrocket over the coming years. Flash chips are used to store digital music, videos, and pictures on portable electronic devices. This industry is poised for future growth and Sandisk is challenging the industry leader, Samsung Electronics by increasing their output of flash chips. It would be prudent to to some more homework on this stock and watch their news and movement closely. However, it could be a good long term play ever since its pullback from 77 dollars in January.

Baidu, a Chinese internet search engine, recently reported earnings that were off the map. This is the most heavily used search engine in China. As this company continues to grow, it will become harder and harder for Google to gain Chinese market share. This share is important because is has the highest growth potential in the world.

The Federal Reserve raised rates for the 16th consecutive time to 5%. The language in the statement contained the standard terms, but the only difference was the use of the word "yet." Many analysts figured the use of this word gave a little more indication that the Bernake may be done with increasing rates. Obviously, the interest sensitive stocks such as the home builders. But, if this language does indicate a slowdown of increase, the pull-back of these homebuilding stocks may indicate a good time to buy some more shares of these stocks. If mortgage rates remain reasonably low, the real estate bubble that everyone is talking about will be pushed further and further away.

Following up my article earlier today, HANS was up big today. This is one of those wave of the future stocks. Because the stock has so far in the past two days, wait for a bit of a pull-back and than put at least some money into HANS.

The talk so far this morning is completely centered around alternative energy. These stocks will be the new wave of the future. Look to stocks centered around businesses with coal, ethanol, and any oil stock looking to expand their operations with alternative energy.

Nearly every day for the past week, PEIX has opened up at its daily high. You may be able to sell your position at the market open, and buy more shares of the stock back on a pull-back.

Ask.com is owned by IAC/InterActiveCorp and trades on NASDAQ under the ticker symbol IACI. Recently, Ask decided to change their image and make their search engine more useful and effective. I have also seen various commercials promoting this updated technology. After viewing the commercial, I navigated through the site. I think this company has the ability to gain market share on the big boys. The tools that the engine uses are very practical and smart. Because they are still trying to get the word out about the new site, earnings have not reflected this upgrade. The next pullback in IACI may prove to be a buying opportunity for this stock.

Informatica Corp. (INFA) has caught our eye recently as a strong play in the software undustry. They develop enterprise data integration software and services for various industries. It is up 5% since we bagan looking at it last week and expect it to continue to the upper teens to low twenties. It has strong ratings in earnings per share (99), relative price strength (87), Industry group relative strength (B+), sales+profit margins+ROE (A), and accumulation/distribution (B) according to Investor's Business Daily. INFA is currently at 16.30. Wait for a pull back and then go ahead and pull the trigger on this stock.

With the Dow flirting with all time highs, this kind of publicity will lure the retail investor back to the street. This means they will be trading with the likes of Charlie Schwab, eTrade, Ameritrade, etc. All three of these stocks could see a push in earnings due to this overall rally in the markets.

It could be time to get into these heavily beaten down stocks. Microsoft is getting more and more aggressive regarding their strategy towards crushing GOOG. Although I'm not totally sure that is true, MSFT is down so much that there is little risk at this level. GM is more of a channeling stock. It is up today, but wait for a pull-back and jump in for a short term profit.

Due to further allegations of an eye fungus, BOL has dropped even further. It may be more than just one product that is causing this disease which can cause blindness. I can't see this stock recovering anytime soon. This is a good time to sell this stock short until the company clears its name.

(Volume Change)- The movers today include: HBHC (874%), CTSG (436%), SWSI (415%), CBG (297%), and ADM (269%). Look for a pull-back on any of these stocks and hold till 3:30.

PEIX is up close to 12% since we recommended the stock last week. There is another possible trade to consider. Although it is possible that this stock may hit $40 a share by the third week in may, it would take quite a rally to do so. Thus, you may write a May 40 call for $1.15. Up front, it will yield a 3% gain, with the possibility of $4 in appreciation if the stock is called away from you at $40. If called away at $40, you'll be able to stack on an additional 14% on top of the 12% already realized.