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Cramer: Sprint, Zynga Stocks Pass Each Other

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CNBC

Sprint and Zynga represented two stocks on very different paths, one climbing and the other falling, “Mad Money” host Jim Cramer said Thursday.

“Sprint was a $2 stock that everyone had given up on, a company that looked like it was headed toward bankruptcy because of its massive losses and incredible need for capital,” he said.

But due to strong execution and “sheer ingenuity” from CEO Dan Hesse, Sprint turned around and is now trading at $4. Cramer thinks it’ll go higher still.

Going in the other direction was Zynga.

“This $3 stock used to be at $15 and was much loved by Wall Street, until today when it reported a hideous quarter, losing nearly 40 percent of its value as a slew of brokerage houses took it off their ‘buy’ lists,” Cramer said. “What the heck was it doing on their buy lists in the first place, anyway?”

Guidance for Zynga was in the range of 23 to 29 cents of earnings per share. Currently, it’s 4 to 9 cents.

“The one thing Sprint and Zynga have in common? The clueless analysts following both stocks have done a terrible job of adding value. In fact, they’ve subtracted it,” Cramer said.

Sprint, due in part to the iPhone and bargain pricing on data, looks like a winner for the future, he added. Plus, the stock rally will help fund the costs of transitioning Nextel customers to Sprint.

Zynga’s a different story.

“Look, as someone who’s addicted to Scramble with Friends, which I play with my daughter daily, I have learned never to pay Zynga for anything, including those coins that help you win, so I enjoy the for free aspect of this terrific game,” Cramer said. “Looks like I’m not the only one who won’t pay up.”

Cramer also called out the faddish nature of online games, which makes the sector tough to predict with certainty.

So many stocks have been left for dead when they get to $2, including, recently, Nokia, Alcatel-Lucent and Radio Shack.

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“It’s a rare bird that can come out of that $2 death trap,” Cramer said. “The unheralded Sprint’s one of them.

“Zynga? All I can say is welcome to the graveyard, the graveyard that your Wall Street cheerleaders whistled right past, even though they should have seen it coming.”

Cramer chided those analysts, saying it reminded him of the first Internet bubble.

“The most tragic thing about Zynga is that this was so easy to see coming,” he said. “Never forget, Santayana was right, those who forget the market’s history are doomed to repeat it.”

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