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