MAD MONEY RECAP (MAR 5, 2007)

On tonight’s MAD MONEY on CNBC, Jim Cramer said you can make money in the right sectors because there is always a bull market somewhere.  Cramer said that every time there is a large crisis you get bailed out by the Fed, and that takes stocks up and you have to have more than a one-month perspective.  Negativity isn’t a mistake and not all of the markets around the market are as linked as you are expected to believe.  Coca-Cola (KO) is one that Cramer thinks has bottomed.  This one will make more money when it repatriates.

Cramer said sub-prime loans for working-class people has tightened credit to where an average worker cannot buy.  Cramer said he doesn’t think it will be anything close to 5% of the loans in the system going bad and he thinks it could be 1.5% total.  He is now saying that the glass is half full in the sub-prime.

One defaulted consumer debt Jim Cramer likes is called Portfolio Recovery Associates (PRAA-NASDAQ).  They buy defaulted debt for pennies on the dollar and are able to collect.  The company has been a victim of the panic because of being tied to the bad debt arena. Since Feb 20 its fell from $49 to $41 and the short interest is huge.  Shares climbed 2% after Cramer discussed this to $42.44.  It only takes on debt where it sees fit and only buys the debt when it finds that it can collect.  The company I had listed in my own second tier defensive stocks was a competitor to this one called Asset Acceptance Capital (AACC-NASDAQ).

Jim Cramer also interviewed an officer from Ceradyne (CRDN) and he said that one contract pending could give the company good visibility out to 2012.  As fas as the margins not being able to get better, the company head did say that the margins could grow even though he was cautious in a conference. He thinks yields on it will creep up. Cramer said he remains bullish on the name.

Jon C. Ogg
March 5, 2007