Cramer's Picks - Is GM Lehman's Twin? (11/14/08)

by: SA Editor Miriam Metzinger November 16, 2008 | about stocks: AMD / ETN / GM    
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tocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday November  14.

General Motors (GM)

Cramer asked viewers a hypothetical question: would they be willing to buy stocks if they thought there was another Lehman Brothers’-style collapse on the horizon? Those who would answer “yes” are "rosy people, totally beyond help, who do the bull dance everyday on air." Cramer thinks GM, which is losing money at an astounding rate from its poor earnings and incessant borrowing, is Lehman Brother’s twin “more fraternal than identical” because unlike Lehman Brothers, GM is a job-producing machine. Saving GM is as much of a no-brainer as protecting your 401(k). Cramer urged viewers to sell stocks while they can and added if he were still a hedge fund manager, he’s be shorting many of his positions. Those who absolutely believe the government will bail out GM and Europe and China will raise rates should buy, but only with caution. Cramer warned that if Obama makes Tim Geithner his Treasury Secretary, Geithner is likely to give GM the “Lehman treatment” and let it go bankrupt. In that case, Cramer would be a bear on the market.

 

Invest in America: Eaton (ETN) with CEO Sandy Cutler

 

Cramer’s final Invest in America segment was dedicated to Eaton, an “accidental high-yielder” with a perceptive CEO who scaled back production when he saw the slow-down coming. Eaton’s yield was down to 2% when the company was at its 52-week high, but since its decline, the yield jumped to 4.8%. Eaton is a stock worth scaling out of as it rises and scaling into as it falls, a strategy that actually works with this market and this stock, said Cramer. CEO Sandy Cutler discussed Eaton’s move away from auto systems and into power management; Eaton now produces high energy transformers, capacitors and energy maintenance products, a business which generates 46% of its sales. Cramer says, in spite of the slowdown, Eaton is a much better company than it was in 2003.

 
Speculation Friday: AMD (AMD)
 

Cramer says he never believed he would recommend AMD, but that day has arrived after tech stocks were slaughtered on Friday and AMD got the worst beating. After AMD has been knocked down over 67% it can now be bought, but Cramer suggested buying AMD also in December when it is likely to get socked further. AMD competes with Intel in the CPU market and the company was “worked hard” to become a single-digit stock and was eating its own profits. However, Cramer says the company is finally focusing on profitability by spinning off its cash-draining chip manufacturing business. Another bonus is that Chairman Hector Ruiz, "incompetent former CEO, ex-wall of shamer" will be spun off along with the business. Cramer says even if AMD’s spinoff doesn’t bring up his stock price, he doesn’t see AMD going much below $2.20.

 

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This article has 6 comments:

  •  
    Nov 16 06:32 AM
    Not a cheerful economic scene, more like being at a funeral parlour than a birthday party. We are talking about economic death here and there, not a celebration here and there.

    It therefore pays to be careful though some argue the reverse ie bet the house in case the corpse come alive! It all depends on your risk profile.
    Reply | Link to Comment
  •  
    Nov 16 09:45 AM
    GM has to solve their problems themselves. They have made big profits in the past and they should be allwed to make big losses now. They have granted their employees so many benefits which were unsustainable, that it would be very unfair to let the public pay for them.
    Reply | Link to Comment
  •  
    Nov 16 11:16 AM
    have a court appoint a receiver to direct the co.i worked for a co that was in receivership and it worked out well and th co got back on its feet,
    Reply | Link to Comment
  •  
    Nov 16 02:34 PM
    Sure, save the million dollar bonus crowd in lower Manhattan, but screw helping the U.S. auto industry and the rest of "fly over country". I served this country along with many other family members over three (3) foreign conflicts. I'd never do it again. It's every one for themselves now. The only real loyalty is to the dollar and patriotism turns out to be a tool used by the powerful.
    Reply | Link to Comment
  •  
    Nov 17 10:35 AM
    Crammer is an ass and an ass with a very short term memory. "Cramer says he never believed he would recommend AMD." Really? On August 13th regarding AMD he said “The stock can be bought. I think it could go to $7 or $8 before investors have to sell it.”

    Want to make money? "King of the Hill" was right on its parody of Crammer on Nov 16. He says buy, selll. He says sell, buy.
    Reply | Link to Comment
  •  
    Nov 17 11:35 AM
    Does anybody take Cramer seriously? He's an entertainer.
    Reply | Link to Comment
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