Game Plan: The Chuck Prince/Citigroup Trade
Update: Since Mad Money aired Friday, reports are saying that Citigroup CEO Chuck Prince will offer to resign Sunday, Nov. 4. Read about it here.
Either Chuck Prince is gone from Citigroup this weekend, or it will never happen, Cramer said. He doesn’t think Prince will be able to sustain the dividend with all the acquisitions the CEO has made. If Citigroup doesn’t move on from Prince, Cramer said, then homegamers need to move on from Citigroup.
The dry shippers took a pummeling this past week after China flexed some muscle and attempted to drive down shipping rates. Initially, Cramer thought the sector would bounce back next week, but a talk with Diana Shipping Chairman and CEO Simeon Palios on Friday’s show tempered his enthusiasm.
Palios, who called in from Greece, said predicting shipping rates was “a very dangerous exercise,” but that short-term cargo movements and ship deliveries make him “optimistic” about the near to midterm freight market.
The stock price for dry shippers is based on fleet size, and Cramer wanted to make sure there won’t be a sudden influx of ships to the market. “Eventually, maybe yes,” Plaios said, “but at the moment, I think we’re safe.”
Palios’ cautious tone left Cramer a bit deflated, but he said he’s still positive on these dry bulk shippers.
Cisco Systems reports earnings Wednesday, and Cramer recommended getting in ahead of the number. This tech giant probably won’t regain its old velocity, he said, but Cisco has 13% growth and it sells at only 20 times earnings.
On Tuesday, Hologic takes the stage, and this quarter will have some contributions from the CYTYC merger in it. Cramer called this new company “the ultimate powerhouse diagnostics play,” and he thinks homegamers should buy some stock before the quarter.
Foster Wheeler and Allergan have historically sold off after reporting earnings, which gives investors the perfect chance to get these two stellar stocks on sale. Allergan is the best-positioned company in the baby-boomer market, Cramer said, and Foster Wheeler is in the sweet spot of the world’s need for more power.
Cramer also wanted viewers to switch out of CBS and into ConEd. ConEd has the growth CBS lacks, and the utility has a great dividend.
A final point for the week from Cramer: The Fed should continue to cut rates. Cramer thinks more mortgage insurers will collapse, and the ripple effect will be enough to force an emergency Fed meeting. That should lead to another half-point cut, he said.
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