Monday, July 31, 2006

What Cramer Said Tonight On Mad Money

Satellites of Like
Unlike Amazon, there are stocks that do get cheaper as they go down, Cramer said. However, there are few analysts that understand which ones are good and which ones are not.
There are analysts that will keep telling people to buy stocks as they sink and to sell when they have bottomed.

A perfect example of this is AT&T (T) , he said. Analysts loved this stock when it was in its $30s, $20s and in the teens, whereas Cramer said he despised it.
However, when the stock got down to $6, all the analysts turned on it. They decided to hate it after it had plummeted, he said. Meanwhile, AT&T was becoming more valuable compared with all the other companies in its sector as it went down.

AT&T was the perfect takeover target at $6, Cramer said. Right now, in real time, the same thing is happening to XM Satellite Radio (XMSR) . Cramer said he hated it while it was in the $30s, $20s and teens, but now it's at $11.60, and he believes that it's not just a buy, but a triple buy.

He said he knows for a fact that the stock has bottomed because CIBC analyst Jason Helfstein, who was telling people to buy XM Radio in its $30s, $20s and teens, has cut and run from the stock, at which point anybody who was in the stock on the advice of CIBC sold it.

When an analyst who has been consistently wrong about a stock changes his or her mind about it, you should change your mind about it too and do the opposite of what the analyst thinks you should do, Cramer said.

At $11.60, XM Radio is now a $3 billion company and is the perfect takeover target, just like AT&T was, he said. XM Radio has some problems with the Federal Trade Commission, but it is a short-term issue, he said. It would cost Sirius Satellite (SIRI) $4 billion to buy XM Radio because the company has $1 billion in debt.

But Cramer believes that buying XM Radio would be good for the company because Sirius could have a monopoly in the sector. "Right now there is genuine competition, and it's hurting both companies," he said, adding that the iPod is not a threat, and the companies offer more than just music.

The only thing hurting the companies now is competition, he said, adding that he believes XM Radio has hit bottom and could be bought by Sirius here -- and make you some mad money.

Link to article: HERE

7/31/2006 10:35:00 PM

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