Nothing To Ship - Cramer's Stop Trading! (10/22/08)

Recap of Jim Cramer's comments on Stop Trading! Wednesday October 22.

De-Railed - Norfolk Southern (NSC), Peabody (BTU), CSX (CSX) and Ryder (R)

"I think the rails come down," Jim Cramer said "But I've been saying that for a while, and they haven't come down." Norfolk Southern reported a better than expected quarter Wednesday and said pricing momentum for the transportation firm will continue through June, but Cramer disagreed. All the items Norfolk moves most likely will not hold up next year, Cramer said so the rail company shouldn’t expect business to continue at its present pace. Norfolk Southern and other rail companies are "locked in a lot of deals, but remember, you're shipping coal – Peabody says coal's hanging in, but I don't think that could happen -- you're shipping fertilizer, obviously lumber's not going anywhere, oil's not going anywhere," Cramer said. "I mean, what are you shipping that's going to hold up next year?" CSX and Ryder, which Cramer called a "great company," might feel the effects, too. Ryder System is struggling in the tough economy. Cramer said that Ryder CEO Greg Swienton "said there's nothing to ship." Swienton's "an honest, candid CEO," Cramer said, "and he's a realist. He's talking about a reason why the Dow's down 400." Rails across the board will probably slow, Cramer said. He would only recommend the corporate bonds CSX recently issued rather than any common stock in the sector.

Steel Thoughts – Nucor (NUE), U.S. Steel (X)

In the steel sector, Cramer said he preferred Nucor over U.S. Steel because the former’s raw costs are much more manageable and it offers a better dividend yield. As for U.S. Steel (X), Cramer said he thinks Nucor's "got a better situation." "I respect the fact that U.S. Steel is going down, and I think it could go down more," he said. "What a decline, because the yield isn't like Nucor's yield."

Drilled - Transocean’s (RIG), Diamond Offshore (DO)

Finally, Cramer said that sinking oil prices will most likely cause cancellation of deepwater drilling projects. That’s why Transocean’s share price can’t seem to find a bottom, though a shallow-water driller like Diamond Offshore is less affected.

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Comments

[CT Programmer:]

There's no rhyme or reason for the share price of anything these days. A railroad sees a decline in traffic of what? 5%? 10%? And suddenly "they're shipping nothing". What BS. Cramer is full of hot air. I used to hold Woodward Governor (WGOV), but I pushed the button and sold a while back because their PE was just getting too high. A few days later Cramer gets on and hawks them to the moon. They get about a 15% bump (I kick myself for selling a week too early). Of course, 2 weeks later they're back where they were when I sold, and now of course the stock is 20% cheaper.

2008 Oct 23 08:54 AM

[Norman Lepo...:]

RIG was a 'bullet proof" buy, buy, buy at 120? Anyone remember?
Cramer should be taken off the air!
I do not watch CNBC any more. Switched to FOX. Cramer is a flake.

2008 Oct 23 10:43 AM

[Michael Del...:]

Dr. Norman,

Did you buy RIG at $120 because Jim Cramer said it was a buy, buy, buy? Even though you knew the price of oil was dropping every day? Even though you knew we were headed into a recession and the demand for oil was going to go down before it goes back up?

If you did, then you are to blame, not Jim Cramer. And oil will rebound. Probably sooner than most people think. I think two years from now you will wish you had some $120 RIG. If you thought you could make a quick 20% and be out, this is a mighty dangerous environment to try that with any stock. If you thought you would hold RIG for 18 to 24 months, what's the problem?

2008 Oct 23 06:32 PM