By Roberto Pedone
Posted on May 7, 2010
According to Jim Cramer, if you want to play a market that doesn’t work, you need to be diversified and own http://www.stockpickr.com/port/Dividend-Stocks-for-the-Week-Ending-May-7/ "> dividend-paying stocks. In a May 6 RealMoney blog post, he said that in a fast-motion crash, you have to be ready with buy orders at prices that make too much sense.
Cramer noted Procter & Gamble (PG) as an example after the stock plunged while he was on CNBC. The plunge was possibly due to a trader’s key-punch error where someone was trying to sell $15 million worth of stock and the order came out as $15 billion. Cramer mentioned that he wasn’t sure if this was the cause of the more-than-900-point drop in the Dow, but what he does know is that the system was overwhelmed, and the market didn’t work.
>> Who Owns Procter & Gamble?: Warren Buffett> Who Owns JPMorgan?: John Paulson
Cramer wants market players to return to the old rules regardless of what happened on Thursday. Those rules include trusting in yields and dividends. He pointed out that had an investor had a buy order in on P&G for when it yields 5%, he or she would have made good money. So good in fact, that the investor could have bought 1,000 shares and made $3,000 in five seconds.
Recently, Cramer found opportunity in undervalued bank stocks, anti-panic stocks and stocks to buy for companies you can figure out. Here are some Cramer highlights from over the past week as aggregated from his "Mad Money" TV show, the "Stop Trading!" segment on CNBC and his RealMoney blog posts (these blog posts might require a RealMoney subscription).
Cramer's Undervalued Bank Stocks: Cramer believes the bank sector is one of the most undervalued out there. On Wednesday's "Mad Money" TV show, he said with bad losses down for the quarter, and with JPMorgan Chase trading at just seven times earnings, the stock is a steal. The Cramer's Undervalued Bank Stocks portfolio includes Citigroup and Bank of America.
>> Who Owns JPMorgan?: John Paulson
Cramer’s Crisis Stock Buys: Cramer thinks the fear in the markets is creating opportunities in stocks such as Perrigo (PRGO) and Motorola (MOT). On Tuesday’s “Mad Money” TV show, he said drug companies such as Abbott Laboratories (ABT) are very cheap at the moment. The Cramer’s Crisis Stock Buys portfolio includes Sprint Nextel (S) and National Fuel Gas (NFG).
>> Who Owns Abbott?: Bruce Kovner
Cramer’s Anti-Panic Stocks: Cramer has noticed that dividend stocks and anti-panic stocks like Duke Energy (DUK) have been getting a rush of new money! On Tuesday’s “Stop Trading!” segment, he told viewers that even the homebuilders like D.R. Horton (DHI) could work because these domestic companies are not levered to Greece, Spain or Portugal. The Cramer’s Anti-Panic Stocks portfolio includes Altria Group (MO) and Wal-Mart Stores (WMT).
>> Who Owns Wal-Mart?: Karen Finerman
Cramer’s Stock Buys for an Insane Market: Recently, Cramer recommended stocks such as Netflix (NFLX) and Steve Madden (SHOO) for plays on an insane market full of panic. On Wednesday’s “Mad Money” TV show, he told viewers to buy stocks that are working, and that means stocks that are uniquely domestic, have strong growth, or do well when the rest of the market panics. The Cramer’s Stock Buys for an Insane Market portfolio includes Atlas Energy (ATLS) and General Mills (GIS).
>> Who Owns Wal-Mart?: Renaissance Technologies
Cramer’s Stocks you Can Figure Out: Cramer wants investors to buy stocks they can figure out like Teva Pharmaceutical (TEVA) and Weyerhaeuser (WY). In a May 5 blog post, he wrote: “I don't have time for drama. I don't, right now, need to be heartsick when I turn on the machines at 4:30 a.m. and know that I have to bet on a short-covering rally so I don't get my head handed to me. I don't want to think every minute about the oil futures, or the dollar, or gold.” The Cramer’s Stocks You Can Figure Out portfolio includes Apple (AAPL) and F5 Networks (FFIV).
>> Who Owns Teva?: SAC Capital
Cramer’s Fear Returns Stocks: Cramer has noticed fear-driven selling returning to the markets in stocks like Joy Global (JOYG) and Freeport-McMoRan (FCX). In an April 30 blog post, he wrote: “If you didn't know any better, you would think that China's slowing down dramatically, even as there is not a single sign of such behavior.” The Cramer’s Fear Returns Stocks portfolio includes Google (GOOG) and Panera Bread (PNRA).
>> Who Owns Freeport?: Ken Fisher
RELATED LINKS:
>>"Fast Money" Portfolios of the Week
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Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.
