Cramer's 'Mad Money' Recap: Analysts Not on Board (Final)
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NEW YORK (TheStreet) -- "In my 32 years on Wall Street, I've never seen a less positive group of analysts," Jim Cramer announced to his "Mad Money" TV show viewers on Thursday, as he sounded off on what he called the most negative research he's ever seen.
Cramer said that sure there are worries in the market, but we're not headed for another downturn.
Cramer said that "doing the homework" has always been a part of his daily routine. Reading earnings releases, listening to conference calls and analyzing research reports is a major part of stock picking, he said. Yet after the market meltdown and subsequent recession, it appears that Wall Street believes the market will stay bearish forever. "I've never seen anything like it," Cramer explained.
He said when Whole Foods (WFM) reported an acceleration of an already fast-growing company, no one cared. Instead of recommending or upgrading the company, the analysts talked of stretched valuations, stating that the company's good news was already "baked into" the share price. Whole Foods is going from $77 to $100, said Cramer.
Similarly, analysts remain indifferent over Apple (AAPL) , a stock which Cramer owns for his charitable trust, Action Alerts PLUS. With the expected introduction of it's next iPad looming, Cramer said analysts should be telling investors this stock is headed to $500 a share. But again, nothing.
Cramer said the trend continues with companies like 3M (MMM) getting a downgrade on the news of its new CEO, of shares of Cisco (CSCO) and Coca-Cola (KO) totally shrugging off great earnings.
Cramer said things aren't perfect, but they're sure better than Wall Street analysts are leading on and it's costing investors big gains.
Betting on Retail Shopping
In the "Executive Decision" segment, Cramer sat down with David Henry, president and CEO of Kimco Realty (KIM) , a community shopping center REIT that operates 800 centers across the country. Kimco reported a 93.5% occupancy rate at its centers as well as its seventh consecutive quarter of positive income growth.
Cramer said in the past, he's not been a fan of Kimco, as the company had many non-retail properties that made the company difficult to understand. However Henry noted that Kimco now has just 4.5% of its portfolio in non-retail properties, making it a pure-play on retail shopping.
Henry also touted the fact that by specializing in neighborhood shopping centers that sell consumer staples like groceries, drugs, discounted items and services, they are far less vulnerable to Internet competition. Furthermore, Henry said that recent bankruptcies of companies like Borders gives Kimco an opportunity, since many older tenants have leases below market value.
Likewise, Henry downplayed the news that Sears Holdings (SHLD) will be closing many Sears and Kmart locations. He said that Kimco's Kmart and Sears locations all pay below market rent and if some locations close, his company will have no problem filling those spaces.
Turning to the company's international expansion, Henry said that Canada has a strong economy and only about half as many retail locations per capita as the U.S. With many American retailers expanding into Canada, he said it's an excellent opportunity for Kimco. Henry has equally bullish on Mexico, a country with eve n fewer shopping centers.
Cramer said after panning Kimco for a long time, he's now willing to recommend the company as a pure-play on the growth of retail. Kimco currently yields 4.1%.
A Screaming Buy
For the next installment of "All Request Week," Cramer answered the question of whether or not to own Berkshire Hathaway (BRK.B) , the company headed by famed investor Warren Buffett.
Although it's been lagging the overall market as of late, Cramer said that investors should own Berkshire going into 2012. He said the main reason for the company's poor performance is the fact that Berkshire is a mosaic of so many companies and industries that few analysts follow it. But, he noted, if you break down the businesses that Berkshire owns and compare them to others in that sector, you'll see that many at at 52-week highs.
Berkshire owns a railroad, for example, and it's clear that commodities that are shipped by rail are on fire, sans coal. That's why Union Pacific (UNP) is near its 52-week high. Berkshire also has a flooring division. Cramer noted that Mohawk Industries (MHK) is also at its highs. The same applies to Berkshire's paint division, think Sherwin Williams (SHW) , and its pipeline business, think Markwest Energy (MWE) .
Cramer said that Berkshire of course also has a big insurance arm, and with premiums on the rise, that too is an improving business. Buffett also made a big investment into Bank of America (BAC) , another company on the rebound, but even if that recovery is slow to materialize, Cramer noted that Berkshire still gets big dividends.
"Berkshire is a screaming buy," said Cramer, and investors need to consider the company for their 2012 portfolios.
Am I Diversified?
Cramer spoke with callers and tweeters to see if their portfolios have what it takes for today's markets. The first portfolio from Twitter included Conoco Phillips (COP) , John Deere (DE) , Eaton (ETN) , SPDR Gold Shares (GLD) and Potash (POT) .
Cramer said that Deere and Potash were two agriculture stocks and recommended selling Potash in favor of a healthcare stock.
The second portoflio's top holdings included Apple (AAPL) , Walt Disney (DIS) , SPDR Gold Shares (GLD) , McDonald's (MCD) and AT&T (T) .
Cramer said this portfolio was "perfecto."
The third caller had Denbury Resources (DNR) , Solar Capital (SLRC) , Annaly Capital (NLY) , AT&T (T) and Excelon (EXC) as their top five stocks.
Cramer said that Solar Capital and Annaly Capital were too similar and he recommended substituting a healthcare name for Solar Capital.
The fourth caller's top stocks were Berkshire Hathaway (BRK.B) , Community Bank (CBU) , Microsoft (MSFT) , Chevron (CVX) and Pfizer (PFE) .
Cramer blessed this portfolio as diversified.
Lightning Round
Cramer was bullish on Annaly Capital (NLY) , Lowes (LOW) , Standard Pacific (SPF) , Herbalife (HLF) , Continental Resources (CLR) and EOG Resources (EOG) .
Cramer was bearish on Yahoo! (YHOO) , Frontier Communications (FTR) , Veolia Environnement (VE) , Armour Residential (ARR) , Magnum Hunter Resources (MHR) and Thomas & Betts (TNB) .
Game Changer
In his "No Huddle Offense" segment, Cramer called the government's recently announced $26 billion settlement with five major banks over mortgage misconduct "a game changer." He said the housing glut in our country has been at the epicenter of our economy recovery and this settlement makes tremendous progress.
He said that first, it puts cold hard cash into the pockets of millions of homeowners. Moreover, it will allow millions more to refinance as well as speed through the remaining foreclosures, all while helping the banks avoid billions of dollars in endless litigation.
Cramer said for the past few years banks have required huge down-payments or been unwilling to refinance at all. They've also been a huge obstacle in buying any short-sale property. With this huge settlement, Cramer said that he's once again recommending Wells Fargo (WFC) as his favorite banking play.
Closing Comments
Cramer told investors not to trade on rumors surrounding Diamond Foods (DMND) , but told them to definitely buy into LinkedIn (LNKD) , which reported great earnings.
--Written by Scott Rutt in Washington, D.C.
To contact the writer of this article, click here: Scott Rutt.
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