Jim Cramer Blog

In the current Bull market, natural resources continue to rise. Cramer's BRIC countries have allowed minerals to thrive. These BRIC countries include: Brazil, Russia, India, and China. These countries are industrializing rapidly and taking form in growth and consumption of medals. Cramer likes companies that do business abroad in these countries not native companies. Tonight he listed six companies that could make mad money with the Bull market in minerals. The first three are mining companies and the last three are extraction companies.

Mining Companies:

BHP Billiton BHP- They are within the top three for producing copper, nickel, coal, and others.
Freeport McMoran FCX - They are the lowest cost copper producer in the world. They are also one of the largest producers of copper and gold in the world. They yield a 2.4% dividend and are inclined to pay special dividends. This is a good long term play.
Rio Tinto RTP - They are the mineral supermarket to the world because they have so many minerals in production. They are the 2nd largest producer of iron ore.

Extraction Companies:

Manitowoc Co. MTW - They are the best crane company in the world and as we all know, cranes are essential for mining minerals. This company should also benefit from the Highway Bill passed by congress and the rebuilding of the Gulf Coast.
Terex CP TEX - They make hydrolic lifts for mining materials. They should be bought on any weakness.
Caterpillar CAT - They make the best mining trucks in the world and are the best of breed.

Today billionaire investor and 9% owner of GM, Kirk Kerkorian, wrote a letter to CEO Rick Wagoner urging GM to consider a three-way partnership between Nissan Motor Corp. and Renault SA. This news sent shares of GM up +2.36 points (8.6%) signaling a quicker then expected turnaround. This partnership promises future cost savings on product development and a closer association with Carlos Ghosn, who is credited with driving Nissan's turnaround and now heads Nissan and Renault. This move would significantly raise shareholder value for GM. It might be a good idea to begin looking to purchase this stock while its still near its 5 year low.

Today the FED raised rates 1/4 of a point to 5.25%. However, in the wording they suggested that a future pause in rates could be likely. The market rallied after hearing this news. Perhaps Bernanke is finally coming into his own.

New Century Financial Corporation (NEW) operates as a real estate investment trust in the United States. It originates and purchases mortgage loans through two divisions, Wholesale and Retail. The Wholesale division provides loans through a network of independent mortgage brokers and correspondent lenders. It also originates mortgage loans through its FastQual Website at www.newcentury.com, where a broker uploads a loan request. This stock is in the middle of its 52 week range and has a dividend of 15%. I believe the rate hike today will spur a panic buying cycle in the housing market, directly affecting the profitability of this company. This stock is a good short term play.

About 47,600 hourly workers decided to leave General Motors (GM) and Delphi Automotive after the companies offered an incentive package for those who would cooperate. This is a further push to cut costs at GM. As we have said, the only way for this company to get back on track is to reorganize the entire operation currently in place and start over. This surprise cooperation will bring GM about two years ahead of schedule in terms of cost cutting. This is a significant development. GM offered buy outs of $140,000 for workers with at least 10 years of service, while those with less than 10 years would receive $70,000. The workers would cut nearly all ties with the company except for vested pension benefits. It seems like a good deal on both sides of this equation. We are reiterating our buy on this stock, but watch for increased volatility. It may be wise to protect this investment with a protective put.

Tonight on Mad Money Cramer expressed that there is always a bull market somewhere and winning in the stock market is not random. You need to make plans and stick to that plan. The key is knowing yourself and what kind of trader that you think you are. He also said that you should never turn a trade into an investment because it becomes possible that emotions will drive your trading habits. If you have $50,000 to invest, Cramer said that you should buy between 5 and 10 stocks, but decide what style of trading you want to conduct and stick with that decision. The first step towards finding the next big investment is finding a financially viable company with little debt and good cash flow. This should be a basis for any investment decision, not just a general recommendation from Cramer.

Lennar (LEN) is reporting earnings on Monday. Look for $1.86. There has been a lot of speculation regarding the performance of real estate and its sesitivity towards the imminent increase in interest rates. But, historically these mortgage rates are extrememly low. There is no reason for the housing market to slow down. Everyone wants to own a home. If these rates continue to rise, there will be even more of a rush to buy a home, because it is hard to believe that money will continue to be this cheap. Although we cannot recommend any homebuilding stocks for the longterm, we do like this sector for the time being. Housing will continue to be strong.

Lennar (LEN) is reporting earnings on Monday. Look for $1.86. There has been a lot of speculation regarding the performance of real estate and its sesitivity towards the imminent increase in interest rates. But, historically these mortgage rates are extrememly low. There is no reason for the housing market to slow down. Everyone wants to own a home. If these rates continue to rise, there will be even more of a rush to buy a home, because it is hard to believe that money will continue to be this cheap. Although we cannot recommend any homebuilding stocks for the longterm, we do like this sector for the time being. Housing will continue to be strong.

Yahoo (YHOO) has now hit the bottom that we have been looking for. Their Pay Per Click prices are now almost as high as Google. Plus, more people visit this site than Google. Expect the prices of this type of advertising (a significant portion of their revenue) to grow at a faster pace than was previously expected.

Pacific Ethanol (PEIX), a stock we have been recommending while it has been in the low 20s down from its 52 week high around 45, seems to have some renewed vigor. It has been rallying this week and ended up big today. It closed up 1.26 and in the after market has rose between 1.35-1.40. The volume is over 4 million. Expect this stock to continue rising. However, this stock is extremely volatile, so we recommend not putting all your eggs in this one basket, but we are confident in the future of this stock.

Today's rally has inspired masses with the Dow closing up 105 points. In this market, being aggressive can be a good thing, but if you snooze you are bound to lose. To start the show off tonight, Cramer expressed his liking of Research in Motion (RIMM). However, his liking is just trading with this stock, not investing. He believes RIMM is bound to spike once their new Blackberry is released. The Blackberry is already used in over 60 countries and is expected to continue growing. The shares are down 27% and Wall Street has no respect for this stock and its upcoming launch of the Blackberry 8500. Expect RIMM to have serious sales on this new phone. At the heart of every good trade is somthing stupid, in this case being Wall Street's hate for this stock. Expect a better than expected quarted and the stock to rise. Bottom Line: Once the hype builds, sell the stock.Also, the talks of RIMM and AAPL partnering up will not be enough for long term success.There is pin action in Verizon (VZ) as well as MOT and NOK. Palm ( PALM) is cheap and should shoot up once they report earnings.Medical Equipment companies have recently bought by big corporations. Already, companies have spent $60 billion in acquisitions in medical equipment companies. There are three companies that Cramer likes as possible takeover targets:
Viasys Healthcare (VAS), which is big in orthapedics and has one of the most sophisticated lung assistance devices, also has very little debt.
Vital Signs (VITL), which has a great anaesthesia and respatory business
Sirona Dental (SIRO), Cramers favorite, makes money off the aging population and is a very strong company
Bottom Line: Big corporations are acquiring medical equipment companies, get in before it's too late.
Ligthtning Round
Bulls:
HP fly high once they report earnings
OPWV double down here
A buy at 32
BAC
C
TLM buy from 15-18
RAD could go to 6
CHK buy at 29 hold untill 34
QCOM
MCHP
CC
TI
HLT
FS
FRO ring register at 40
COP
CVX
Bears:
EXP
USB
F
TSM
SIMG
MHGC
TOL
ARLP
ARII
Final thought: If you have less than $10,000 to invest, forget stocks and jump into mutual funds.

Tonight's show started off with Cramer comparing Boeing (BA) and Airbus. BA is the company to bet on. In 2005, BA beat Airbus' orders by 55%. The key here however is not Boeing (BA) but the companies who supply them. There is a list of three petential companies that could profit: Triumph Group Inc. (TGI); Heico CP (HEI); and Moog Inc. (MOG-A). Also don't be alarmed by the critics of Boeing, the failure to meet demand will not hurt them.

Cramer also dedicated a segment of the show to his favorite hotel chain Hilton Hotels (HLT). Hilton takes pride in their all suite hotels, catering to the upscale demography. They run 2,388 properties making HLT the biggest hotel chain. However, in the past years it lacked the potential to grow because they could not build internationally. Now, since they bought out the other Hilton, it places them on the international map. They have huge growth potential all over the world. This news is not good enough though, homework should still be done before diving in to such a stock. The numbers must be looked at. In this case, the numbers hold true. Competition can't keep up with HLT. They have a 37 % gross margin blowing the other competition out of the water. Hilton uses their exceptional business model to make money. They use their name to make money. Bottom line: buy HLT.

Lightning Round
Bulls:
TEGS
MATK
SO
VCP
MSFT long term
DEO
TLAB
SGMS
PGR
PRU
MET
HAL
BAC
C
PDC
NKE

Bears:
USNA
SONS
GERN
NTRS
SHOO

Making Sense of the market:Why do the big investment banks trade at 8X earnings and the online discount brokers trade at 16X earnings? The answer is that investors think discount brokers are the thing of the future. Investors think that investment banks and discount brokers are in the same business. The truth is that they are in very different businesses. Investment banks deal with institutional trading, which is a very expensive and competitive business. Discount brokers deal with your average investor. People need to realize that investment banks are still part of the present and will be part of the future. They are changing from their cyclical roots and becoming secular. The reason investment banks are making so much money is because they are prime brokerages. In layman's terms, investors give the bank custody of their accounts and the bank turns these accounts over and lends money to short sellers. They are leveraged to hedge fund growth. The banks make mad money off the interest from the loans.Bottom line: Although discount brokers like Ameritrade (AMTD), Charles Schwab (SCHW), etc. are good buys especially AMTD, don't think investment banks are a thing of the past. Banks such as: Goldman Sachs (GS), Lehman Bros (LEH), and Bear Stearns (BSC) should be trading at the same earnings per share. Capitalize while Wall Street doesn't is in the dark.

Cramer concluded his show by talking with the CEO of Darden Restaurants (DRI). They are the largest casual dining chain in the world with 1,390 restaurants. These restaurants include: Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones, etc. This company has a lot of room for growth since they do not franchise domestically. Their 2005 sales were $5.3 billion, quarter 4 (Q4) net income of $92.3 million or $.60 eps today. Bottom Line: Pull the trigger right hear and pick up some shares.

Cramer breaks investing vow! Investing in an American Airline is no longer a heresy. The company is Continental Airlines (CAL), which is the fourth biggest airline by revenue. Why is Cramer suddenly a fan? For one, it was up today eventhough the market was crummy. Also, and most importantly, the US and Europe have made an "Open Skies" agreement which will increase demand for international flights across seas making the American Airline companies, especially (CAL) prime takeover targets. Hold on until "Open Skies" is launched.Another note on the airline industry, if you want to make speculative plays on bankrupt airlines, get into bonds. Also, Boeing ( BA ) is the only aeropspace contractor to buy.Tonight Cramer talked about what made Master Card (MA ) good and Vonage (VG ) bad. Starting with the cons of (VG ):
They let investors buy up 50% without money down
Stock opened at $17 and ended at $17.25 then fell to $14 the next day
Verizon brought a patent infringement suit against them
They are getting devoured in a competitve business
The pros of (MA):
They opened strong at $39 and ended strong at $46
They have a strong, sustainable business
They have smart celebrity endorsements (World Cup)
Cramer also recommended trying to get a piece of the up and coming J.Crew IPO due to come out in a few weeks.
Lightning Round
Bulls:
SMSI sell at 16
NRB
HAL
NOK
XTO
RIO patience
CNX
TXU ride to 59 and buy more
GW
DIS
Bears:
HERO
TKLC
NKTR sell at 21
TIE
ZZ
To close things up, Cramer talked about how he was wrong about the long term outlook for Urban Outfitters (URBN ). They are a victim of their own succes. The bottome Line: not all stocks that go down, even the one's that Cramer liked, are cheap. Stay away from (URBN ), but stay with Cramer.

Tonight on Mad Money, Cramer exclaimed that you should be buying stocks that have recently come out with good news so there will be no surprises in the near future. And, if a stock gets hit with bad news in a bad market, the stock will drop twice as fast. Companies highlighted were: BSE, and BBY. Although the market is improving, continue to be defensive in your stocks.
Lightning Round:
Bullish: HRS, TGI, AAR, MER, SPLS, HPQ, DGX, GD, CMG, ORI
Bearish: UVN, EMC, SYT, MT

Tonight on Mad Money Cramer downplayed Ethanol stocks and said to sell the positions that you have. He said that this pullback is not a bottom (we disagree). He also stated that you should wait until the margin ratios come back down before you should jump back in the market and you should continue to be defensive and diversified.
Lightning round:
Bullish: AAUK, CHK, YHOO, BRCM
Bearish: HMY, HANS, GS, TLAB, GSIC, ENER, CNXT, WMI

VeraSun Energy Corp. (VSE), a leading producer of ethanol products, rose as much as 30% in its first day of trading. The IPO raised $419.8m for the company and its stockholders. The stellar performance of this stock shows that there still is much interest in ethanol related plays. They have been beaten down more than most in the past week which means they have been completely hammered. Many ethanol plays are cheap compared to the rest of the market.

The Markets today are finally in the green with many quality names trading at discounts. It looks like the panicking is over and some money is slowing moving its way back into equities. Alternative energy plays are also back up after a major correction which leads me to my next point. If you want to quickly gain the money back that you lost in the past week, buy these alternative energy plays. They are extremely volatile so be careful. But, if oil is up and the markets are in the green, these stocks will move forward.

"Who knows where this will stop, but there is still money to be made,"says Cramer. He also said that there are plenty of stocks that have hit their bottom and it's time to go bargain hunting. The best place to go bargain hunting is in the natural gas sector because they are trading like value stocks. Natural gas is trading at the lowest ratio to oil since Cramer can remember. He said these stocks are being dumped for no reason and that you should get on the other side of the selling. He highlighted one particular stock which is the biggest player in Barnett Shale (a very important piece of property), Carizo Energy (CRZO).
An additional idea that he gave was to give a look at stocks that have probably hit a bottom. He highlighted Readers Digest (RDA). The downside has been shaken out and the stock can only go so much lower because of the core fundamentals. The company has great management and is the best selling magazine in the world with 19m subscriptions.

Quarterly profit at Goldman Sachs (GS) climbed to $2.29 billion, or $4.78 per share, after preferred stock payments in the three months ended May 26 from $865 million, or $1.71 per share, in the year-ago period. Results benefited from the $700 million sale of a power plant to General Electric Co.
In addition, they had major gains in their investment banking and trading division. This stock was down 4% today along with the rest of the financial sector. This increase in revenue and net income make the stock price of this company legitimate. GS is the highest quality bank out there. It may be a good time to get in after today's generous discount.

Although the averages are up today, there is still an overall feeling that people are going to be selling into any kind of rally. If you are in this market, watch for a downturn and try to sell some of your positions at the top if a reverse happens. This is a tough market and if you can lower your cost basis by selling at the top today, and buying back late in the day or early tomorrow morning, you will be that much further ahead of everyone else. In a stock market like this, every cent counts.

We're looking for a, "Big, fat bottom" in the market. The question is how do we spot a bottom? If bad news no longer effects the stock then it has hit a bottom and is due for a run up. Some speculators believe the bottom is in tech, but price to earnings ratio is too high in this sector. The price to earnings ratio is the price per share, divided by earnings per share. Cramer believes WCI Communities (WCI ) will bottom soon.Another trading tip from Cramer, when a high profile employee such as the CEO or CFO leaves the company with no good reason, get out of that stock. This just happened with Digene Corp. (DIGE ). The CEO left unexpectedly. This raised the red flags.If risk outweighs reward, get out of the stock. Cramer believes however, that the biotech sector is a good place to be.

Lightning Round
Bulls:
TRMP
QDEL
FNSR
ESRX
MA EZM
NTGR
COH
Bears:
COGO
GGC

Cramer mentioned Tivo Inc. (TIVO ). He said in order to pick stocks you need to make a list of the pros and cons of the stock. With TIVO, there are only a few good things about it: Analysts are heavily bearish on this stock; great technology; and great CEO. However, TIVO is losing their uniqueness. Every company in this sector has their own form of this technology. Their growth has also been very erratic. He said that this is a dog of an investment however money can still be made off of its volatility. Bottom Line: If you want to be a good investor, seperate the good news from the hype. The news needs to lead to making money, not just publicity.Finally, he mentioned Crystallex (KRY) again as a speculative play. A valuable lesson was learned, speculation is not for the faint of heart and do careful research before investing in KRY.

PEIX is getting hammered once again in today's weak market. The entire oil service sector is also in the red as a continuation of last weeks horror show. But, this pull-back presents another good buying opportunity. President Bush is continuing to push the opening of new ethanol plants every day and the conflict with Iran is far from resolved. This stock has tremendous potential to grow especially with the help of the government. We are picking more shares up today.

Cramer feels your pain. It's been a pretty tough market for everyone. He stressed that you should not wait for a mid day rally because it won't happen. These types of rallies have been very rare lately. In the past year, there have only been 14 times that the market closed 90 points higher once the rally started. He also mentioned that there are three ways to look for a market that is ready for a mid day rally. The first is to look at the osilator. This tool measures the pressure that the buyers and sellers are working against each other. When this indicator becomes negative that means that the market is beginning to become over sold. The second sign is that there are very few bulls when the market is ready for a rally, and the third is timing. A good rally will begin at 2:45 or later. The buyers will overwhelm the sellers to buy before close.

He said there is a way to make money in this very poor market by looking at one sector: the stocks dealing with vanity. These stocks have just started to see the benefits of the baby boomers. The first play he mentioned was PMTI who has a product which makes the lines on your fac fade. The other was AGN. The FDA just approved a product called Juvederm which is supposed to make wrinkles fade. But, wait for PMTI to fade before you buy.
Lightning Round:
Bullish:
AMD
OPWV
CMA
COP
GM
PETS
CMCSA
AKAM
Bearish:
HANS
PBR
CNL
Hang in there investors.

Google unveiled yet another idea to drive people to their website. This time they may have actually made some progress in terms of cutting the business of one of their rivals, MSFT. Google's software will be hosted on their website for free. Microsoft does not offer free spreadsheet software. If this Google software becomes widely adopted, it could take a major chuck of Microsoft's software business.