12/12 'RealMoney' Radio Recap: Speculation Causation
By TheStreet.com Staff
12/12/2005 3:59 PM EST
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Bears who believe the market has gotten too speculative will miss the next leg up in the market, said Jim Cramer on his "RealMoney" radio show Monday.
While it's true that Myogen (MYOG:Nasdaq - commentary - research - Cramer's Take) and 8x8 (EGHT:Nasdaq - commentary - research - Cramer's Take) gapped up Monday on "fanciful" news, Cramer said these incidents of speculation are isolated.
Until he sees more activity like that, he believes speculation is not yet out of control and that the market isn't finished going up.
On the flip side, Cramer sees two bellwether, best-of-breed stocks, United Technologies (UTX:NYSE - commentary - research - Cramer's Take) and Honeywell (HON:NYSE - commentary - research - Cramer's Take), which are trading at less than market multiples but are "far from average companies," he said.
Honeywell, which trades at about 17 times earnings, has done nothing for seven years, said Cramer, even though it has diversified and invested in growth businesses, which make it "no longer at the mercy of the economy."
Cramer believes that United Technologies, even though it has seen its stock rise over the last six years, is the "single most consistent stock in the Dow. Isn't that worth a premium?" asked Cramer.
UTX trades at about 17 times earnings, but the average stock trades at 20 times earnings, he said. Why shouldn't UTX trade at 21, 22 or 23 times earnings? He asked.
Disciplined Trader
Former Major League Baseball player and RealMoney.com contributor Lenny Dykstra joined Cramer to talk about Tribune (TRB:NYSE - commentary - research - Cramer's Take) and Verizon (VZ:NYSE - commentary - research - Cramer's Take). Dykstra said he likes Tribune for a trade back to its 50-day moving average at $32.24. He also likes the Verizon April $25 calls for a bounce to $31 or $32, he said.
Cramer called both trades good, low-risk ideas.
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Commenting on Sirius Satellite Radio (SIRI:Nasdaq - commentary - research - Cramer's Take), Cramer said he is "absolutely adamant that the stock has more upside." Cramer said a downgrade Monday by Sanford Bernstein is par for the course, but he recommends holding the stock until closer to when Howard Stern makes his debut. Cramer would let Sirius' stock "cool" for a day or two, and then he would be a buyer.
Of United Parcel Service (UPS:NYSE - commentary - research - Cramer's Take), Cramer said the recent pullback is a "whopping opportunity." He would be an "aggressive, aggressive buyer."
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Cramer said he would not recommend shorting PPG (PPG:NYSE - commentary - research - Cramer's Take) as natural gas prices rise because of PPG's aggressive buyback and its dividend.
Google (GOOG:Nasdaq - commentary - research - Cramer's Take) is working its way to $450, said Cramer. He believes that many investors bought the stock thinking it would be added to the S&P 500. Since it wasn't added, some investors have been selling, he said. But the fundamentals remain fine, he added.
Cramer would not add new money to the Greater China Fund (GCH:NYSE - commentary - research - Cramer's Take), he said.
Commenting on Best Buy (BBY:NYSE - commentary - research - Cramer's Take), Cramer said he would wait until Wednesday to buy the stock. He believes that Best Buy's earnings announcement Tuesday will be overshadowed by the Federal Reserve's meeting.
Additionally, someone is bound to be disappointed with Best Buy's results and will end up selling the stock, he said. Wait until Wednesday to get a better price.
Cramer is a fan of Reynolds American (RAI:NYSE - commentary - research - Cramer's Take) even though it is not as high quality a stock as Altria (MO:NYSE - commentary - research - Cramer's Take), he said. He would hold Reynolds, though, until it yields the same as Altria.
In response to a question about Keynote Systems (KEYN:Nasdaq - commentary - research - Cramer's Take), Cramer said Keynote is a very cheap stock, and he would buy it.
Of Excel Maritime Carriers (EXM:NYSE - commentary - research - Cramer's Take), Cramer said the stock is not expensive, but he is not a fan because too many ships are being built, which will cause downward pressure on shipping rates.
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