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Thursday, October 05, 2006

October 5th - SBUX MO

Cramer started out by talking about companies that stick up for their stocks and spoke of Starbucks Corp. (SBUX) who had a bad monthly number and the stock got crushed but rebounded nicely after the company said not to worry about the bad month and it was just due to a "slow drink". This was a scenario of a broken stock, not a broken company. His new rules were if a CEO has a good reputation, don't let one bad month get in the way and to look past a bad month if the company has lots of growth potential. Cramer then had on the CEO of Starbucks who had some very positive long term growth details for the company. Some compelling reasons to consider this as a buy long term but no real interest here on the short side personally considering the average volume and size of this company.

Next Cramer spoke of Sherwin-Williams Co. (SHW) who was hit with a lawsuit back in February and was hit hard...but rebounded after the initial panic selling. Cramer said a similar situation is with could happen with a recent ruling that says Altria Group Inc. (MO) may have to pay back all the smokers. Cramer said the ruling should get thrown out and the stock should rebound and is a $100 stock masquerading as a $78 stock. MO is too expensive and too big for shorting in my opinion.

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