Sell Block: Cigna Sentenced, Vulcan Materials Released
Cramer offered two important investing rules on Thursday’s show: When you don’t know, don’t buy. And if a company’s CEO or CFO leaves, sell the stock. This simple advice could save you a lot of money.
Take Vulcan Materials , for instance. Wall Street favored this maker of all things aggregate – crushed stone, sand, gravel, asphalt, concrete – late last year in anticipation of President Obama’s spending package. Investors assumed that highway construction would be a big part of any economic stimulus, and that pushed up the stock price.
The problem was that we didn’t yet know all the details of the stimulus. That uncertainty was enough for Cramer to urge viewers to sell VMC on Dec. 1, when it was trading at $56.71. Where is the stock now? Down $14.70 to $42.01, or a loss of 26%.
Things have changed, though. Now, Vulcan Materials, both the company and the stock, is in a much better position, enough for Cramer to recommend it. At these levels, VMC’s dividend yield is a healthy 4.7%, and we finally know exactly where the government spending will go. States served by Vulcan will received a large portion of it, in fact – as much as 60% of the $27.5 billion set aside for highway and bridge projects.
Cramer also loves how much the analysts seem to hate this stock. Right now there are six holds, three sells and just one buy on VMC. This leaves plenty of room for upgrades, which in turn should send the share price higher. For this reason, along with the dividend yield and the upcoming stimulus projects, Vulcan Materials is a buy.
Recent events at Cigna exemplify Cramer’s other investing rule. On May 26, Chief Financial Officer Michael Bell resigned after seven years in his current post and 25 years at the company. In the end, this could mean nothing. And Cigna said that Bell left only because he wanted to be president and then CEO, but that path was blocked when someone else was tapped for president last June and became the CEO's heir apparent. But Cramer wondered, if that were the case, why Bell didn't leave 11 months ago.
Also, three other high-level resignations have been tendered at Cigna in the past year as well. So there is reason enough to be cautious about the company's official line. Cramer has always recommended selling a stock if either of its top two executives leaves the firm. So to be on the safe side, he put Cigna in the Sell Block until he knows everything is OK.
Lastly, Research in Motion is up 33% to $80 from $59.95, the price at which Cramer recommended it on April 7. He recommended taking some profits in RIMM.
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