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.
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After this segment, you
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Round picks
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. . . .
.
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
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price
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day
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think it is indicated by his
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Please read his comments to
decide for yourself.
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We do our best to interpret
Jim's opinion on stocks, as
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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
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This is an excellent
upcoming site that provides
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you do that homework that
Jim Cramer recommends after
hearing his suggestions...
FastMoneyRecap:
This site will be a quick
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made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
