Jim Cramer's Action Alerts PLUS -- Weekly Roundup

Saturday, April 6, 2002 8:05 a.m.

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Dear Action Alerts PLUS Subscriber,

Long week of no real action. Seems like a prelude to more of the same. Let's go over the actuals. I still have almost $200,000 in cash and can't find anything really compelling to sink my teeth into.

Aetna (AET) : Stock was on the move this week hitting $40. HMOs are getting more pricing power, not less, and are trimming their ranks of the poorly performing patients. Bad for the patients; great for Aetna. Sticking by my $50 price target, and I would buy it on any pullback.

Alcoa (AA) : The company is now finally on the path to where it can go, which I think is the mid-$40s to perhaps $50 when the orders finally get better. I like this stock right now and would buy it aggressively below $40.

AOL Time Warner (AOL) : Lots of hand-wringing about how horribly this stock acts. Frankly, I think it has minimal downside and lots of upside with Time Warner being worth about $20 and AOL basically being thrown in for free. I like to make judgments about companies from their ability and ease to finance. AOL financed a huge amount of debt this week at very reasonable levels, telling me that the people in the fixed-income markets think well of this company's cash flow. I would have bought more this week, but got stuck mentioning it on radio so I was frozen. Below $23 it should be bought.

Baxter (BAX) : Problems at Bristol-Myers (BMY) bring into focus why I like Baxter so much. Baxter has a booming product portfolio, less sensitivity to drug price regulation and great management. I would be buying this stock aggressively here. I would pay up to $58 for it.

Best Buy (BBY) : Calendar shift made this company have a light month. For that, it lost 6 points. Seems a little harsh to me. I own 1500 shares; I would buy another 500 at $70. I hate paying above my basis, or as we used to say at the hedge fund, "I hate ruining my basis."

Caterpillar (CAT) : Lot of profit-taking after a very big move. Now back in the buyable range. If I owned less, I would probably scoop some up right here as it continues to trade at a very big discount to its 2003 earnings. Soon, those are the numbers we will be facing!

Cisco (CSCO) : Cisco, I think, is in the midst of another really tough quarter, one which I don't think anyone is going to be excited about. Let's be candid, until Cisco can earn 60 cents a share, which it can't right now, this stock can't go up much. It is stuck, not a place for new money. At $13 it makes sense.

Citigroup (C) : This stock is in no man's land; it is a few points below where I would let some go and 5 points above where I would buy more. I still think that the quarter is a good one, and it was certainly helped by the sale of the insurance business. All that said, the inflation picture worsened this week, which means, ultimately, that the Fed is going to tighten soon, which will put a lid on where C can go. If it drops back to $43, I will buy more.

Clorox (CLX) : Still an inexpensive stock, still doing everything right. I would buy more of it at $41. I think it trades to $50 though. Certainly better than Colgate (CL) , maybe as good as Procter & Gamble (PG) .

Comcast (CMCSK) : Philadelphia cable company that got hit off of Adelphia's ADLAC morass this week. Let's understand why you want to own Comcast: It is going to be the world's largest distributor of news and entertainment. That's why. I bought more this week, again, not knowing when the value of the merger with AT&T Broadband is going to be priced into the situation. Bought some at $30 and will buy more at $29. Would buy it here aggressively.

Commerce Bancorp (CBH) : You know this is my bank. I like these guys very much. I think that even though this bank trades at a premium to its peers, it deserves that premium and could be a $50 stock with a decent tape. I would buy this stock up to $47 and will be incredibly aggressive if it ever trades back to my $41 basis.

Conexant (CNXT) : Stock continues to muddle along as its end markets, wireless, continue to muddle along. We are in it for the breakup value sum of the parts, and that will take a long time to bring out. I am still not impatient. I will buy more when it helps my basis enough, which is below $10. Part of my now minimal tech bet.

Dell (DELL) : Best of the lot. The company gave an upbeat revenue forecast, and I think it remains one of the few tech names that can still deliver in 2002. That said, the market was cruel to it, barely reacting to the better- than-expected revenue forecast. I think this stock has very limited upside from here. At $23 I would actually buy more.

General Electric (GE) : You would think this company is actually doing badly by the way the stock acts, but business is good and getting better. I can't wait to stop talking about this stock and start buying it! I think it is an aggressive buy here.

Guidant GDT: Company is marking time as the coated- stent wars play out. I continue to think that it is cheap enough that you have to own it and just wait, wait for the new products and wait for the earnings to come through. I would buy it right here; in fact, I would pay up to $43 for it.

HCA (HCA) : Tenet Health (THC) reported a great number, and I think that HCA can do the same. The bears are still worried about class-action payouts from litigation. I think those concerns are in the stock. I would still buy it up here and get aggressive at $40.

Microsoft (MSFT) : Deeply disappointing stock. Still not cheap either if it can't make $2 a share, which it probably can't! I am glad I scaled some back last week at $60 and change. If it trades to $50, I will buy all of that back and more. Tech remains the bane of a portfolio's existence.

PepsiCo (PEP) : Biding time, not doing much of anything. But Gatorade season is coming, and I can't wait to see how much this company can make, now that Quaker Oats has been fully integrated. Stalled, very stalled, but still a buy. At $47 I would pull the trigger for more stock.

Pfizer (PFE) : Best of bad lot. Seems to have a pharma lid on it. Been unrewarding, but I am in it for the long term because it has the best pipeline and the best management. At $38 I will buy more. What a horrid group.

Philip Morris (MO) : Underperformed its subsidiary, Kraft KFT, this week. I still think this stock can go to $60, and I would buy stock right here. Cheap Dow stock with great yield. Put through a price increase this week, too! Pending sale of Miller Brewing would be huge for earnings.

Prudential (PRU) : Here's a stock that could be the big sleeper in the portfolio. Sleeper that goes to $40 over time. I think that the business is strong and the cash flow stronger and the multiple way too low. Best bargain in the financials right now.

S&P Small Cap 600 ETF iShares (IJS) : Remember, I put a little of this proxy on and now I want it to drop back before I make another move. S&P Small Cap is a terrific place to be. This is also a good choice for a 401(k) by the way. Don't buy more than 100 shares at a clip if you can help it, as the stock is illiquid.

Target (TGT) : Retail fell out of favor fast. I think it was because of a calendar shift that left us with a potential for a strong April after a weak March. I would buy more Target if it went below $40.

Tyco (TYC) : Circuit-board business -- the old AMP business, is lagging. I still think the worst is over here and the financing is in place, but the company now has to start announcing some sales or its stock will do nothing. I would buy more below $30. I don't think it gets there, though. It has really been hit hard.

UnitedHealth Group (UNH) : Slow and steady is winning this race. I think that numbers are too low for this HMO, and I would bet that the company trades to $90. I would buy more if it traded to the low $70s as it is up on a spike. Best-managed company in the portfolio, though; simply a very well-run company.

United Technologies (UTX) : Defense, cyclicality, what's not to like? No wonder it never comes in. I still think that I would prefer it to be below $70 to buy more. It might get there on an S&P downdraft. I think that L-3 Communications (LLL) , another defense contractor, also looks good. But I want that to pull back, too.

Verizon (VZ) : No, I don't kick myself that I own this company. It is like Comcast, the global leader that is currently under a selling onslaught, but is actually getting stronger, not weaker, as its opponents self- immolate. This New Jersey petition is important; that's what VZ needs to get some earnings momentum. I would buy this stock big-time here (I have paid this price for 1000 shares) because none of us knows when the other phone companies are finally going to go away. Inexpensive, but needs catalyst like Jersey to get it moving again. Pay up to $47 for it.

Viacom (VIA.B:NYSE): I believe this franchise has only one problem: retaining Mel Karmazin, the fantastic manager who gets the job done. I admit that I would be bigger in it right here if I could only get some clarity into whether he is staying for the long term. Otherwise, earnings are snapping back nicely.

Wells Fargo (WFC) : Taking its time, as it always does, chewing through a lot of $49-$50 stock. I would buy it at $45. Don't want to pay up here. Good quarter coming, though.

I sold the AmerisourceBergen (ABC) this week. Way too much worry about drug pricing, which will, inevitably, find its way into lower numbers for this very good drug wholesaler. Had a nice little gain, not much to write home about, but better than a sharp stick in the eye.

Regards,

James J. Cramer

DISCLOSURE: At the time of publication, Cramer was long Aetna, Alcoa, AOL Time Warner, Baxter, Best Buy, Caterpillar, Cisco, Citigroup, Clorox, Comcast, Commerce Bancorp, Conexant, Dell, General Electric, Guidant, HCA, Microsoft, PepsiCo, Pfizer, Philip Morris, Prudential, S&P Small Cap 600 ETF, Target, Tyco, UnitedHealth Group, United Technologies, Verizon, Viacom, Wells Fargo.

These Action Alerts are intended to provide opinions about and analysis of stocks and markets. They are not intended to provide personalized investment advice. DO NOT EMAIL CRAMER SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Cramer welcomes your editorial comments at jjcletters@thestreet.com.

James J. Cramer is a Markets Commentator for TheStreet.com and CNBC, and a director and co-founder of TheStreet.com. TheStreet.com is a publisher, and neither we nor Mr. Cramer is registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. From time to time, Mr. Cramer may write about stocks in which he has a position. In such cases, appropriate disclosure is made. Mr. Cramer must hold all securities in his Action Alerts PLUS portfolio for at least one month. In addition, he is not permitted to buy or sell any security he has spoken about on CNBC for five days following the broadcast. Mr. Cramer's Action Alerts represent his own opinions and should not be relied upon for purposes of transacting securities or other investments, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. He cannot and does not assess, verify or guarantee the suitability or profitability of any particular investment. You bear responsibility for your own investment research and decisions and should seek the advice of a qualified securities professional before making any investment. Please note: Effective Feb. 12, 2002, the holding period for securities in Jim's Action Alerts PLUS portfolio changed from four months to one month.