So the last two stocks aren’t exactly the muscle behind the Dow’s push forward, but Cramer thinks there’s good news in the next piece of the pie: Hewlett-Packard . HPQ is about to take off, he says. It had a great quarter, the management is terrific and the only reason it hasn’t made its big move yet is because tech has been so funky, he says. Cramer usually recommends buying tech near the end of the summer, but he’s said before that Hewlett-Packard is one of only a few tech stocks that could be owned through the summer. He thinks dividend news and a big buyback are in HPQ’s future, and that could propel the stock to $50 well before the end of the year.
Continuing in alphabetical order, the next Dow component is one Cramer got wrong at the beginning of the year when he made his 14,548 call. He was hoping the Fed would cut rates to help housing, and Home Depot would have benefited. He liked the post-Nardelli management which decided to jettison the supply business baggage, but now he’s less bullish. He sees a maximum of three or four points of upside potential and that isn’t enough to recommend it. If housing gets better, Cramer thinks it’s now Sears that will go through the roof. That’s the better play to swap into than HD, he says.
While Cramer was too bullish on Home Depot, he doesn’t think he was bullish enough on Honeywell . He called it to $52 and it’s already at $56. Cramer says he underestimated CEO Dave Cote’s ability to transform the company. The stock is already up 25% year-to-date and Cramer thinks it has the potential to go to $64.
Bottom Line: Today’s installment has been kind of a downer; a sad reflection on a strong index. Cramer’s still standing firm, though. He thinks the Dow has nearly another thousand points of upside left this year, he just doesn’t see it getting much help from 3M, GM, Home Depot or Intel. Hewlett-Packard and Honeywell, though, are two worth checking out.
Jim's charitable trust owns Hewlett-Packard and Sears Holdings.
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