Jim Cramer's Action Alerts PLUS Weekly Roundup

Dear Action Alerts PLUS Subscriber,

We have lots of cash, but there is too much optimism and too many overbought indicators, so we are going to be in a watch-and-wait mode until prices come down more. The plan is to be opportunistic about sells as well as buys.

We have picked up a huge amount versus the market of late and we are in no mood to give any of that back. Don't expect to see a great deal of buys until the indicators are less overbought (they are plus 5 right now, a danger zone on the S&P oscillator), and the bulls are fewer than 45% (they are at 49 now). That makes the playing field more level for our buys than our sells.

Field bet: No changes. Sell Lucent (LU:NYSE, $1.21). Qwest (Q:NYSE, $4) and JDS Uniphase (JDSU:Nasdaq, $2.50) are keepers, and we're still on the fence about Corning (GLW:NYSE, $2.40).

For those who are new to the Roundup, Ones are the stocks I am buying right now; then the Twos, the stocks I might bid for; the Threes, which I expect to fall still more; and the Fours, which I am looking to jettison.

ONES

Aetna (AET:NYSE, $39.45) I had CFO David Kelso on my television show Monday night, and I left with a confirmed belief that Aetna will continue to move higher. A Prudential downgrade and a potential blowup at Tenet Healthcare (THC:NYSE, $14.90) weighed on the stock later in the week. While the sentiment towards HMOs is very poor right now, Aetna's turnaround remains intact, and I would be a buyer below $40.

ExxonMobil (XOM:NYSE, $34.61) Bought a new position of 1,000 shares on Wednesday. I would really like to buy more if the market didn't look so overbought because I think Exxon is the best way to play oil right now. Great management team that gives back operating profits to the shareholders through repurchases and dividends.

General Mills (GIS:NYSE, $41.85) Continuing to cut costs with two Midwestern plants picked to likely close within the next year. I already own 3,000 shares at these levels, but think that Mills is a Buy at the current quote.

Honeywell (HON:NYSE, $26.01) Rallied on the improved optimism for asbestos-related stocks, following the Republican takeover of Congress. Bought another 1,000 shares on Monday, as I'm not sure we'd have too many more chances to pick up the stock around 25 bucks.

Masco Corp. (MAS:NYSE, $21.41) Started a new position on Masco, along the theme that lower interest rates will keep new housing and home-improvement demand strong. The company has good demand visibility going into the current quarter, and just settled a legal claim that had really been hanging over the shares for some time. I would buy another 1,000 shares at $20.

Raytheon (RTN:NYSE, $29.49) I think defense stocks are a no- brainer down here. I have a full position in Raytheon down here, but I think that this company and Northrop Grumman (NOC:NYSE, $98.54) are attractive at current prices.

Royal Dutch (RD:NYSE, $43.49) Coupled with Royal Dutch, I think we have a great play going on the oil sector. Would buy another 1,000 shares on a pullback.

Skyworks Solutions (SWKS:Nasdaq, $8.09) Secured the financing we had been looking for, and without excessive dilution. New convertible offering significantly lowers Skyworks' cost of borrowing, and the company now looks fully funded for the foreseeable future.

So Skyworks got the big financing deal like we said they would. Got the Lehman upgrade like we said they would. My third prediction for Skyworks is that the stock sees the double-digits before the end of the year.

Target (TGT:NYSE, $30.75) October same-store sales growth of 1%-2% was in line with expectations. The company expects an 8%-10% decline in November though, because of the late Thanksgiving holiday. I think the market was already pricing in this difficult comp, however, and that Target remains the most attractive retail stock I can find.

Toll Brothers (TOL:NYSE, $19.80) While I had one ear listening for the Fed rate cut on Wednesday afternoon, my other was pressed closely to the bullish Toll Brothers conference call. Business still looks good in all of the company's most lucrative regions. Would aggressively purchase the stock below $20 because I think the recent rate cuts will help propel the housing-market rally.

I think the Lehman sector downgrade is a bit premature and that Toll's strong order backlog and low valuation will attract investors to push the stock back into the mid-$20s.

TWOS

AOL Time Warner (AOL:NYSE, $15.34) Selling seems to be over, although there hasn't been any good news to speak of lately. Remains attractive in the midteens, for the Time Warner assets of course.

Comcast (CMCSK:Nasdaq, $24.08) FCC getting closer to giving the ultimate approval to the AT&T Broadband deal. This merger is more anticipated than the new Harry Potter movie, and I like the fact I'm holding 5,000 shares as we near the home stretch.

Conexant (CNXT:Nasdaq, $1.88) Now receiving early payment for $140 million that a lot of investors probably didn't think they'd ever see again. And voila! The selling pressure has stopped. Giving Conexant a conservative valuation for its cash and revenue run-rate, the stock could easily be worth 3 bucks per share. Just can't commit more funds knowing that management continues to burn through so much cash at MindSpeed.

Keyspan Energy (KSE:NYSE, $34.86) I want to own more than 1,500 shares of this utility. Keyspan has plenty of room to grow in its core markets. Would be more aggressive with the dividend yield back above 5%.

Nextel Communications (NXTL:Nasdaq, $12) All kinds of rumors flying around this week, from an earnings warning to a possible takeover. My research shows that the company is on track to meet its subscriber goals, which should allow Nextel to continue and reduce its debt load. Bear Stearns' downgrade took some wind out of the sails, but I believe we'll be able to take profits at 15 bucks.

Philip Morris (MO:NYSE, $42.74) Tobacco is another area that could receive some breaks from a more business- friendly Congress. For example, the 6% dividend would be even more attractive if some or all of it becomes tax- deductible.

Sara Lee (SLE:NYSE, $23.15) Some insider selling hit the tape, but I went through the new 10-Q and the business seems to be doing just fine. Turnaround story and dividend keep Sara Lee attractive, and I would aggressively add to my 1,500 shares on a pullback.

Washington Mutual (WM:NYSE, $35.81) Cheap, and margins should hold up well following the latest rate cut. I think there's another 10%-15% potential upside until we look to start taking some off the table.

THREES

Bank of America (BAC:NYSE, $67.11) I would consider rebuilding my position if the stock came in a little further, but I am otherwise ready to lock in the 20% gain on my remaining 1,000 shares at $70.

Commerce Bancorp (CBH:NYSE, $43.69) Pulled off 500 shares on Friday. I really like Commerce, but I am frustrated that it didn't move better on the deep rate cut. I love the company, but it's no bargain in a market that looks overbought.

FleetBoston Financial (FBF:NYSE, $23.09) New CFO Eugene McQuade is inheriting quite a challenging position. The company's 6% dividend is attractive, but it could come under pressure next year if the Brazilian economy cannot pull out of its tailspin.

Prudential took down its 2003 estimates this week, saying that recent revenue growth would not be sustainable. Just because domestic credit quality has stabilized does not mean it's going to improve meaningfully anytime soon. I would only add to existing positions on a pullback.

Philadelphia Suburban (PSC:NYSE, $21.20) Reported a solid quarter, even ahead of the earlier preannouncement. Will likely hold onto my remaining 4,000 shares until at least this coming Friday so I'll be eligible for the quarterly dividend.

Reader's Digest (RDA:NYSE, $16.30) Starting to lose patience with this name. Would start paring back my 4,000 shares into strength.

Schering-Plough (SGP:NYSE, $22.24) Getting very close to swapping my 2,500 shares for Pfizer (PFE:NYSE, $33.87) or Johnson & Johnson (JNJ:NYSE, $60.27). Dividend and an always-present takeover possibility make it worth holding onto in the meantime.

Verizon (VZ:NYSE, $38.68) I like Verizon the company, but I think we're due for a pullback in the stock. That said, I trimmed back 500 of my shares on Friday. As well-positioned as Verizon looks in its core markets, the threat that WorldCom could be allowed to emerge from bankruptcy with a debt-free balance sheet should be taken very seriously.

Viacom (VIA.B:NYSE, $44.15) The company's television programs continue to top the broadcast and cable charts. Not cheap enough to chase here, but I think that patient investors will be able to take profits in the high $40s.

FOURS

Citigroup (C:NYSE, $36.87) Closed the Golden State Bancorp deal this week, but I would continue to sell this stock into strength. I cannot make this trade myself because I keep talking about Citi on my radio show.

Regards,

James J. Cramer

DISCLOSURE: At the time of publication, Cramer was long Aetna, AOL Time Warner, Bank of America, Citigroup, Comcast, Commerce Bancorp, Conexant, Corning, ExxonMobil, FleetBoston, General Mills, Honeywell, JDS Uniphase, Keyspan Energy, Lucent, Masco, Nextel Communications, Nortel Networks, Philadelphia Suburban, Philip Morris, Qwest, Raytheon, Reader's Digest, Royal Dutch, Sara Lee, Schering-Plough, Skyworks Solutions, Toll Brothers, Verizon, Viacom, and Washington Mutual.

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 has registered as an investment adviser with the U.S. Securities and Exchange Commission. We are not a registered broker-dealer.

Mr. Cramer is subject to certain restrictions in transacting for his own benefit in securities he purchases for his Action Alerts PLUS portfolio. SPECIFICALLY, 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 OR HIS RADIO PROGRAM FOR FIVE DAYS FOLLOWING THE BROADCAST. Action Alerts PLUS contains Mr. Cramer's own opinions and is provided for informational purposes only, and no mention of a particular security constitutes a recommendation to buy, sell or hold that or any other security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. You further understand that Mr. Cramer will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in Action Alerts PLUS may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Mr. Cramer's past results are not necessarily indicative of future performance. DO NOT EMAIL MR. CRAMER SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. He welcomes your editorial comments at jjcletters@thestreet.com.