Jim Cramer Blog

Bullish Calls:
Ameriprise (NYSE: AMP - News): 'I continue to try to buy ... It keeps getting away from me. But it's still dirt cheap. I think this is a real winner.'AeroVironment (NasdaqGM: AVAV - News): 'I thought unmanned aerospace was going to be the next thing. ... I would actually pull the trigger right here. I would buy AVAP.'Portfolio Recovery Associates (NasdaqGS: PRAA - News): ' I remain bullish on Portfolio Recovery because anything that preys upon that weakened American consumer who needs help is a triple buy.'Spirit Aerosystems (NYSE: SPR - News): 'I think it's run too much. Can we put it in the Don'tBuy camp?'BE Aerospace (NasdaqGS: BEAV - News): 'the answer is bullish!'AAR (NYSE: AIR - News)Precision Castparts (NYSE: PCP - News)Barnes Group (NYSE: B - News): 'It's got railroads, it's got precision instruments; in other words, it's got bulls running with it. I like letter B.'Rio Tinto (NYSE: RTP - News)Companhia Vale Do Rio Doce (NYSE: RIO - News): [RTP, RIO BHP and FCX are the] ' four horsemen of another era, and you need to stay long these until I tell you otherwise.'BHP Billiton (NYSE: BHP - News)Freeport McMoRan (NYSE: FCX - News)Savient Pharmaceuticals (NasdaqGM: SVNT - News): 'You know this is one of my favorite stocks. Why would you leave it now?'Amazon.com (NasdaqGS: AMZN - News): 'I think Amazon's an up stock. ... I would continue to buy it.'Crocs (NasdaqGS: CROX - News): 'We're gonna get out of Crocs when we have four analysts recommending it. Right now we only have two. ... I'm staying long Crocs.'
Bearish calls:
Staples (NasdaqGS: SPLS - News): ' ... I have put people in this thing for a year now, and it hasn't moved. Sometimes you have to admit you're wrong and move on.'
Published By SeekingAlpha

Labels: AIR, AMP, AMZN, AVAV, B, BEAV, BHP, CROX, FCX, Jim Cramer, Lightning Round, Mad Money, PCP, PRAA, RIO, RTP, SPLS, SPR

Bullish calls:
Walt Disney (NYSE: DIS - News): 'The stock itself is a screaming buy. It's a buy, buy, buy! They have bought back - one of the biggest buybacks ... This stock goes higher. I would buy it right here. Buy, buy, buy!'Clearwire (NasdaqGS: CLWR): 'They priced this deal badly with everybody in it, they got hurt. But they have no shame... I think CLWR is a long-term winner, because they have Craig McCaw... We are not going to make money now, because all the flippers are in it... Shame on them. It remains a buy.'Ameriprise Financial (NYSE: AMP - News): 'Warren Buffet likes it. I like it. I hadn't realized that that stock had come down that much... At $55? You know, this thing is growing at 10%. It sells at 14x earnings...Hey, you know what? AMP - Buy, buy, buy!!'Savient Pharmaceuticals (NasdaqGM: SVNT): 'They've got a phase III deal coming. I never liked SVNT for the earnings. I liked it for all the stuff in the pipe.'Genzyme (NasdaqGS: GENZ)Celgene (NasdaqGS: CELG): 'CELG is on the move. That is the one to buy right here!'Gilead Sciences (NasdaqGS: GILD)Transocean (NYSE: RIG - News): 'We like RIG, which I said was going to go to $75, and it did today. It will be back Friday, if you missed it.'Halliburton (NYSE: HAL - News)GlobalSantaFe (NYSE: GSF - News): 'We like GSF, another offshore driller.'Foster Wheeler (NasdaqGS: FWLT): 'If you want to be in that business, you consistently ... go buy FWLT. And the reason is that they don't have a lot of overruns. And I think you absolutely have to fear overruns more than anything else in that group. I think that FWLT is the play.'Walgreen (NYSE: WAG - News): ' ... anytime you can get that stock below $45, you pull the trigger... That is one of the best-run... the best safety in the retail business.'Yamana Gold (NYSE: AUY - News): ' ... we want to be in AUY! That's the gold company.'
Bearish calls:
Patterson-UTI Energy (NasdaqGS: PTEN): 'No, the other day we talked about this... The other day we said we are not going to buy domestic drillers ... because we are offshore. PTEN is wrong.'Washington Group (NasdaqGS: WGII)Marsh & McLennan (NYSE: MMC - News): 'I took Cherkasky [CEO] off the 'Wall of Shame,' because he's trying his best, but there's no earnings momentum there. They need a new guy there, or they should sell themselves.'Kinross Gold (NYSE: KGC - News): 'No! KGC is a sale! We don't want no stinking KGC!'
Published By SeekingAlpha

Labels: AMP, AUY, CLWR, DIS, GSF, HAL, Jim Cramer, Lightning Round, Mad Money, RIG, WAG

American ExpressBusiness Risk: Below AverageEconomic Moat: WidePrice/Fair Value Ratio*: 0.83
American Express (NYSE:AXP - News) has a fantastic business model. Because Amex cardholders tend to spend more, on average, the company is able to levy a higher per-transaction fee on participating merchants. What's more, since Amex uses its own network to process transactions, it has access to the cardholder and merchant side of any transaction. As such, the company issues the card and maintains the customer relationship, keeps the entire fee it levies on merchants, owns the associated credit card receivable and the interest thereon, and has access to detailed spending data. Morningstar analyst Ryan Batchelor thinks the firm's late 2005 spin-off of its advisory unit, Ameriprise Financial (NYSE:AMP - News), has allowed Amex's flagship card-related business to really shine in 2006, and he sees a very bright future.
Wm. Wrigley Jr.Business Risk: Below AverageEconomic Moat: WidePrice/Fair Value Ratio*: 0.85
Wm. Wrigley Jr.'s (NYSE:WWY - News) significant miscalculation regarding the strength of acquired confectionery brands from Kraft Foods (NYSE:KFT - News) has caused consternation among investors. However, Morningstar analyst Mitchell Corwin believes the firm is taking positive steps, such as shuffling top management, improving innovation, and boosting advertising to revive the purchased brands and cement its U.S. leadership position in chewing gum. A slowly improving domestic business and continued international prosperity paint a bright long-term picture, in Corwin's view.
* Price/fair value ratios calculated using fair value estimates and closing prices as of Friday, Jan. 19, 2007.
Published by Jeffrey Ptak, CPA, CFA

Labels: AMP, AXP, KFT, WWY

New Investments and AdditionsAs of Sept. 30--Berkshire's most recent filings with the SEC--the conglomerate didn't add any new positions compared to its June 30 report, but it did receive shares in Western Union (NYSE:WU - News) which was spun off from longtime holding First Data (NYSE:FDC - News). Berkshire also increased its stake in five of its existing holdings: Iron Mountain (NYSE:IRM - News), Lowe's (NYSE:LOW - News), Nike (NYSE:NKE - News), and USG (NYSE:USG - News).
I think the most intriguing of these is Western Union, which dominates the lucrative money transfer market. My colleague Mark Weber has long held Western Union to be the most undervalued part of First Data's overall business, and believes that the spin-off now allows potential investors to participate in the economics of this outstanding franchise at a very attractive price. In fact, Weber estimates Western Union's fair value to be $32 per share, about a 45% upside to the firm's current share price.
It should also be noted that Berkshire boosted its stake in USG, a manufacturer of gypsum wallboards, which emerged from asbestos related bankruptcy last June. Berkshire has owned USG since 2001, and more recently backed a rights offering from the company in mid-2006. Given Buffett's experience with asbestos liabilities via Berkshire's insurance operations, as well as his acquisition of the formerly asbestos burdened John Mansfield, I'm cautiously optimistic about Berkshire's stake in USG as well. I will note, however, that as of this writing Morningstar does not have a rating on USG shares.
Eliminations and ReductionsEven though Berkshire is typically a buy and hold investor--especially when it comes to making wholly owned acquisitions--it does from time to time trim or outright sell some of the positions in its equity portfolio. In the quarter that ended Sept. 30, Berkshire modestly trimmed its position in beer maker Anheuser Busch (NYSE:BUD - News), sold some of its holdings in tax adviser H&R Block (NYSE:HRB - News), continued to divest its stake in financial services distributor Ameriprise Financial (NYSE:AMP - News), and appears to have sold a significant chunk of its shares in mass-market retailer Target (NYSE:TGT - News).
The apparent decision to jettison shares in Target is surprising, given that Berkshire had recently released that it built a position of 5.5 million shares of the retailer through June 30. Berkshire's Sept. 30 filing indicates that the conglomerate now only owns 745,000 shares. An analysis of Target's stock price history indicates that if Berkshire did in fact reduce its position in Target, it would likely have done so at a price at least equal to, if not below, the price at which it had accumulated the position. Given that Berkshire still has sizable positions in relatively similar retailers like Wal-Mart (NYSE:WMT - News) and Home Depot (NYSE:HD - News), it seems odd that Berkshire would do an about face on Target. It should be noted, though, that the SEC allows Berkshire to delay filing its holdings on some stocks while it is still accumulating a position. For example, this is how the conglomerate has disclosed its growing stake in Johnson & Johnson (NYSE:JNJ - News). Thus, it's still possible that Berkshire has maintained a position in Target, with the disclosure being somewhat delayed. Giving further credence to this hypothesis is my colleague Joseph Beaulieu's $65 per share fair value estimate for the retailer, which indicates that at Morningstar we still believe that the shares are moderately undervalued.
Less surprising than Target, however, was the continued liquidation of the Ameriprise shares, which Berkshire had acquired when longtime holding American Express (NYSE:AXP - News) spun off the unit in mid-2005. My colleague Dafina Dunmore believes that it will be difficult for Ameriprise to generate above-average returns on capital due to a difficult regulatory climate and intensifying competition. Given this outlook and the fact that Dunmore believes the shares are fairly valued right now, I suspect that Berkshire will continue to divest itself of Ameriprise over time.
5-Star StocksAs of Jan. 8, only four of Berkshire's stocks boasted 5-star Morningstar Ratings for stocks, which itself is an interesting commentary on overall stock market valuations. That said, our analysts still believe that the shares of United Parcel Service (NYSE:UPS - News), Wal-Mart, the aforementioned Western Union, and White Mountains Insurance (NYSE:WTM - News) are currently offering investors the potential to earn attractive long-term returns.
More interesting still is that even with the recent runup in the share price, Berkshire's stock still has a 5-star rating, with a fair value estimate of $4,550 per class B share. In my view, an investment in Berkshire would have a dual benefit--it gives investors exposure to all of the companies in Berkshire's equity portfolio as well as to the conglomerate's substantial private holdings.
The Complete HoldingsHere's the complete list of Berkshire's equity portfolio, ranked from the largest position to the smallest. I continue to note that despite having 39 names in the portfolio, Berkshire's holdings are very concentrated. The top 10 stocks account for more than 80% of the portfolio: American Express, Anheuser-Busch, Coca-Cola (NYSE:KO - News), Conoco Phillips (NYSE:COP - News), Johnson & Johnson, Moody's (NYSE:MCO - News), Procter & Gamble (NYSE:PG - News), Washington Post (NYSE:WPO - News), Wells Fargo (NYSE:WFC - News), and Wesco (AMEX:WSC - News).
Source: Justin Fuller, CFA

Labels: AMP, AXP, BUD, COP, FDC, HD, HRB, IRM, JNJ, KO, LOW, NKE, PG, TGT, UPS, USG, WMT, WTM, WU