Wednesday, 07/23/08
Posted 07/23/08,  11:03 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Wednesday, 07/23/08

  Dow Jones: 11,632   + 29
  NASDAQ:   2,325   + 21
  S&P 500:   1,282    + 5
 
 
 
 
 
First Segment
   
Opening Segment 1 Title: 'Imagination at Work'

.  .  .  .  .

Featured Stock(s):

General Electric (GE)

See GE's official website here.
See the Yahoo! Finance profile for GE here.


See Opening Segment 2, below...

 
After this segment, you can see Jim's Lightning Round picks here...

.  .  .  .  .

JJC:    So I'm sitting around over the weekend, reading this weeks' BusinessWeek, and I come across this hugely bearish article about my boss' boss' boss, Jeff Immelt, I may have been missing a boss there... The CEO of General Electric (GE), which owns this network, and I came to this paragraph... I'm going to read it verbatum, because it got me thinking real hard... Quote: "Even with the disposal of insurance, the reality is that GE remains a company that's far more exposed to financial services than many investors would like."

Back in 2001, when GE Capital made up to 40% of the company's net income, the argument continues, Sherin said he wouldn't want that ratio to go above 45%, at least for a few years. Now those businesses are roughly half the net, financial services, scary... I put the magazine down... I said, there you go, that's it... Ah, hah, that's why GE is being punished... It's a hidden financial... Sure enough, in the time that it took to write the article, presumably early last week, through today, we have seen almost all of the financials going from this to this... From sell, sell, sell, to buy, buy, buy... 50%, 60%, 70% up... And in some cases, Wachovia 100% up... Far worse companies than GE when it comes to balance sheet or lending... And at the same time, GE, it's done next to nothing... Despite it being, according to BusinessWeek, far more exposed to financial services than many investors would like...

Now, wait a minute... It's illogical Mr. Spock... You can't be darned if you do and darned if you don't... If you die by the financial sword, you should live by the financial sword... I say live long and prosper, buy some GE... Bussiness people want to point out that GE lost a billion dollars, whoa, a billion dollars, in subprime from WMC mortgage before selling it last year... Horrors, a billion... Hey, come on... The vast majority of banks would have killed to lose that little, killed... And it got rid of it almost a year ago... And do you think you could sell WMC mortgage now or any other subprime unit?... You'd have to pay another company to take it off your hands...

As one analyst covering GE's actually and truly better than expected second quarter wrote last week, here's one... Talking about darting with faint praise, there is a pervasive "lack" of bad news... GE beat the estimates for heavens sake... Can you name me one financial that didn't have a gigantic shortfall relative to expectations set just three months ago... All of the others were drastically reduced, and the only other answer is GE... For all of the others, we're thrilled, absolutely thrilled if they only lost $6 billion, instead of $8 billion... GE, again, made money... $5.4 billion for the quarter, to be precise... It's planning to sell its weakest business to consumer and industrial segment, we spun off the share holders next year...

So the worst area will be gone...

That leaves GE with some really strong businesses... Like infrastructure, other infra plays during this whole period are up huge... How about the year over year FLR, up 36%... JEC up 24%... ABB, really comperable, up 17%... GE is down 28%... Not logical... GE is also the biggest wind player... We don't talk about it because it's such a small part of the business, but it's the biggest and would otherwise be in our "WindEx"...

How about healthcare?...

We love healthcare stocks on Mad Money... We're supposed to hate GE because it has a healthcare business?... While everyone else is stuck in poorly performing consumer finance businesses, GE is dumping theirs at what I think is going to be a great price... I think the remaining GE will dominate all the rest of lease finance... It's competitors like CIT are being left in the dust... And it has what it appears to be a fortress of a balance sheet... Yeah, I should have included it in the fortress four banks, making them the fortress five, as GE's balance sheet looks better than WFC's, JPM's, BAC's and USB's... Those guys look like the Ford and DMV in food compared to GE... The only other financial name that hasn't moved is Washington Mutual... And that's run by General Custer... I mean, that's run by General Kerry Killinger, a true Mad Money Wall of Shamer, if there ever were one... GE is the center rower, you know we like these with 50% of sales from international, merging markets, rose 20% for the second quarter, but it seems like nobody cares...

Actually this is one of those chances that for each of the positives I mention, you're supposed to go "nobody cares"... With a 4.5% yield among the highest in the Dow Jones average and repeat after me, nobody cares... After taxes, even after Obama's taxes, I think you have a winner...

Here's the most important part...

People better start caring because if the market won't take GE up, the Shaichs will do it... At the exact bottom in the 1990 bank stock cataclysim, a Saudi Prince nobody had ever heard of, bought a huge chunk of the then lowed and despised CitiGroup... That marked the beginning of one of the greatest runs I've ever seen in my life... Now GE is making a huge deal with the Avudabi state owned, Mubadala development company... My prediction... Just like we all know now who Prince Alaweed is, we'll remember the name Mubadala after GE recovers... This company wants to be one of the top ten share holders in GE... You know how you get that?... You gotta buy a minimum of 125 million shares... That's $3.4 billino dollars worth... At these prices, well, I don't know how it stays here... Mubadala will be there every day buying... It's like there's a second buy back to GE... For all wee know, Mubadal development could become the biggest shareholder... Who knows what kind of firepower this sovereign company has?... Back in 1990 when Prince Alaweed bough his big stake in Citigruop, nobody knew who the heck he was... Yesterday most people said, who the heck is Mubadala?... I don't want to be as glib as I was in 1990, when I shouted to Karen Cramer, then my trading partner, who is this clown prince, when it hit hthe tape?... Well, the answer was, the crown prince, was the man who called the bottom, something I didn't realize until the stock rallied 25%... We got this news yesterday and everyone yawned, who is this Mubadala?... I'm saying Yabba Dabba to Mubadala, as in Yabba Dabba Doo...

.  .  .  .  .

The Bottom Line!:     General Electric (GE) got taken down along with the financials because it's largely one of them... But it hasn't rallied with the rest of the group, even though it's the real fort Knox to those zinderknuffs, which, as much as I love the movie Bow Jest, was in the end, over run... I think this investment by Abu Dabi's Mubadala development will be what puts in the bottom, and starts sending these shares, back, back up where they belong... And until then, GE is paying 4.5% dividend yield to wait... Hmm, I can't believe I said all this about the company I work for... But now I'm darn glad I did.

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


GE

29.33

na

General Electric (GE)

 

 



See all of tonight's stocks' latest quotes on Yahoo! Finance



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Second Segment
 
Opening Segment 2 Title: 'CEO Interview'

Ronald M. Shaich, CEO

.  .  .  .  .

Featured Stock(s):

Panera Bread Co. (PNRA)

See PNRA's official website here.
See the Yahoo! Finance profile for PNRA here.

 
After this segment, you can see Jim's Lightning Round picks here...

.  .  .  .  .

Jim's comments BEFORE the interview:      Imagine a world, a world in which gasoline has topped at $4.11, a world where the ethanol mandate has gotten scrapped, and there was a housing bill, allowing $300 billion in financings, a dry up of foreclosed home, a decline in grain prices... Well I think this utopia might not be that far off... Today, we acknowledge, not that Happy Days are here again, but that happier days could be here again... Tonight, I'm going to look at what would happen to companies if this new world becomes a reality... Because Cramer is betting on it...

What would it do to Cramer-Fave Panera Bread Co. (
PNRA)?... a stock that was down more than $2 smackers today, despite much better than expected earnings... Today we acknowledge not that happy days are here again, but that happier days could be here again... Tonight I'm going to make three assumptions that I could prove true... What happens to companies if it turns out that gasoline is going down huge?... What happens if grain prices do plummit because the ethanol initative is scrapped?... And, what happens if the president signs into law legislation?... It could help end house price depreciation, the biggest consumer scourge of all...

All right, why use PNRA as the lens to see what the future of lower grain prices and you know, a firm housing market would look like?... Aside from the fact that I love it... Because, PNRA is one of the very few resaurants that guided up, 33% gain, despite what they called, and they use this term, it's not vymy republic using it, hyper inflation in wheat and gasoline... PNRA got killed today just because it said that the last few weeks or so of store traffic haven't been that hot... I say you've got to be kidding me... And I have to ask, what would the end of hyper inflation of wheat and gasoline do to PNRA?... What would happen if wheat, which makes up most of PNRA's raw costs, as you can see from these desired goods, and has been jacked up along with corn, actually went down, along with the gasoline it takes to get to PNRA... I think these things are not only possible, but also extremely probable, after what we saw at this point today... And as we saw in today's New York Times, the backlash against ethanol has started, being led by the governor of Texas who has asked the EPA to scrap the mandate... As for gasoline prices, gasoline will be down big soon, because we found the level that oil will not trade through, $150, which means gasoline will not trade through $4.11, particularly after today's decline... We simply don't buy a lot of oil and gasoline at those higher prices... I believe $3.50 gasoline is around the corner... What else could make us happier?... Natural gas prices are now not as bad as we thought... 10% increase in heating, not 50% when it comes to winter, very meaningful... Housing bill will buy a lot of the inventory of foreclosed homes... We're down to building 600,000 single family homes from 2 million two years ago... That's the same number we were building in 1991... Housing is getting into balance... Happier days could be here... The systemic risk of financials off the table because of treasury, though I still expect some banks to fail... These are the assumptions I'm using to recommend to you PNRA, because they're telling you all this stuff is not coming to pass, even though they've raised numbers... They're conservative people... All the bad news is priced I think into their stock... But, what if something good happens?... PNRA is usually hurt by the high price of wheat, which is going up gigantically because of the ethanol mandate...

I think PNRA has the ability to be the next big thing, the next big restaurant chain... I would have said, by the way, the next
Starbucks Corp. (SBUX), but now everyone hates it... Even though I think Starbucks is bottoming right here, it is now buyable... Whenever you have people protesting to keep stores open, you've got real demand... PNRA is amazing in that has actually cut a minute off the speed of service, has cut labor costs, has margin expansion... No other restaurant has that... No one has that... And I think it's offering a truly healthy menu... This is the story of the future, not unlike the chef of the future, in my favorite Honeymooners episode... I'm so much more bullish than even the company... Especially because I get my Classic Salad with chicken, no tomoatoes please, after every single field hockey practice... Make mine the chili bowl at the fat Panera's on Route 202 in Flemington New Jersey... Let's have Ronald Shaich, PNRA's CEO on, and we can do a reverse interview, where I push the stock to him, just kidding... But we would like to talk to him to really know what the impact would be if we killed ethanol and gas prices had topped...

Mr. Shaich, it is my pleasure to welcome you to Mad Money...

.  .  .  .  .

Jim's comments AFTER the interview:      You heard his raw costs, you heard he's locked costs in... You heard how many he can put up... You know that this best single place stock for people who want to have a decent 45 minute dinner... I think Panera Bread Co. (PNRA) is, I think some of these guys are going to downgrade it tomorrow... That's your chance... I would buy it... And, by the way, I'd eat there too, because it's pretty darn good.

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


PNRA

48.74

na

Panera Bread Co. (PNRA)


     

 

 

Go to the LIGHTNING ROUND from tonight's show here >>

See current quotes on Yahoo! Finance from tonight's show stocks here >>

Symbol keys:

A Charitable Trust stock. - An asterisk next to a stock symbol indicates that Jim mentioned it is a stock that he manages within
his charitable trust portfolio.  You can see the complete portfolio
of stocks here >>

Thumbs up - indicates he would buy the stock or, at the very least, not sell the stock.  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Thumbs down - indicates he has said not to buy or to sell the stock, based on his comments  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Back up the truck - indicated by Jim, when he says the stock is so good, that he would do a 'mon-back' on the stock... In other words, this is the sound someone would say to a truck driver, "Come on back... " as he is "backing up the truck" to load up on his cargo.  Translation for buying stocks:  This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.

Stumped. - Of the 2,000+ stocks that Jim Cramer has in his head, for which he has an informed opinion, he sometimes comes across a caller with a stock he does not know well enough to opine on...  He then indicates he is stumped and will have to come back to it, after he does some homework of his own on the stock.  This usually occurs during the Lightning Round, when Jim does not know in advance who is calling, or what their stock question is about.
 

 
Definitions of key phrases used by Jim, known as "Cramerisms":

Definition:   'Pull the trigger' is Jim's phrase for making the decision at that point to trade - either to 'buy' or to 'sell' (although he usually uses the phrase for buying), as if to say you should feel comfortable enough to make the final decision without looking back...

Definition:   'Ring the Register' is Jim's phrase for selling a stock, and making it a final sale, that you should not look back on.  Put it behind you.

Definition:  'Let It Come In' indicates how you may wait for it to pull back, or have the stock price come down briefly, as your chance (after letting it come in) to buy the rest of your position (i.e., total number of shares you own in that stock).

Definition:  'backing it up' or 'doing a 'mon-back' is Jim's phrase for the metaphor of backing up a truck to load up on a stock by buying it.  'Mon-back is short for the imaginary worker saying, 'Come on back...' as the truck is backing up to receive its load... Notice that we use the little truck icon to indicate where Jim has mentioned this.  Translation for buying stocks:  This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.
  See more "Cramerisms" & other financial phrases here >>
   
Helpful Websites:
  See the stocks currently known to be in Jim Cramer's
Charitable Trust at:

jim-cramer-charitable-trust-stocks.com

 
See the stocks currently known to be in Warren Buffett's portfolio
of stocks at:

warren-buffett-portfolio.com

 
  Stock Homework 101:   This is an excellent upcoming site that provides resources and links to help you do that homework that Jim Cramer recommends after hearing his suggestions...

StockHomework101.com

This site is coming soon.   Thank you.

 
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Fast Money Recap - Trades for next day...

Compare these picks to Jim's comments for the same stocks.

 

 

   
   
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