Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday, November 3.
Election Picks: First Solar (NASDAQ:FSLR), Chesapeake Energy (NYSE:CHK), Potash (NYSE:POT), Agrium (NYSE:AGU), Mosaic (NYSE:MOS), Gilead Sciences (NASDAQ:GILD), Humana (NYSE:HUM), Halliburton (NYSE:HAL), Transocean (NYSE:RIG) ExxonMobil (NYSE:XOM), Valero (NYSE:VLO), General Dynamics (NYSE:GD), AeroVironment (NASDAQ:AVAV), KBR (NYSE:KBR), Tenet Healthcare (NYSE:THC)
Cramer discussed the election’s effect on stocks and said an Obama victory would be good news for alternative energy, fertilizer and healthcare and bad news for drillers and coal. His picks include First Solar, Chesapeake Energy, Potash, Agrium, Mosaic, Celgene, Gilead Sciences, and Humana. A McCain victory should be a win for oil and defense, and Cramer’s GOP Administration picks are: Halliburton, Transocean, ExxonMobil, Valero and GD. For those who are hedging their bets in this election, AeroVironment, KBR and Tenet Healthcare are good picks regardless of who wins.
The polls seem to be indicating an Obama win, and if the Democrats gain control of the White House, agriculture will be back in the saddle. Like many agriculture and commodities stocks, Deere was hit hard, falling 59% from its 52-week high. However, the company hasn’t bit the dust; September same-store sales grew both domestically and overseas. Cramer invited Chairman, President and CEO of Deere, Robert Lane, to discuss Deere’s ability to provide food and fuel to the world, declining grain inventories, bountiful harvests, low debt and innovations in equipment. Lane also noted Deere was successful in selling its commercial financing in the credit markets and offers flexible financing for its customers. Lane told Cramer he is not worried about commodity price manipulation, but has his eye on the long-term development of alternative fuels to keep Deere moving. “It’s obviously a very rocky time, but Deere is a very strong ship,” Lane said.
An Obama victory will be good for fertilizer, since the Democratic candidate has openly supported increased ethanol production. Corn requires three times as much fertilizer as wheat, and demand for maize is expected to increase 33% in the coming year. However, not all fertilizer stocks are created equal; Terra is more levered to corn production and its main ingredient, ammonium nitrate is taking market share from ammonia. The stock offers a whopping 12.8% dividend and Terra is a master limited partnership which is required to return its free cash flow to shareholders. The next quarterly dividend is $2.80, and interested investors should buy the stock by Tuesday to qualify before the Wednesday deadline. Terra Industries owns 75% of Terra Nitrogen, and while Cramer usually stays away from parent-subsidiary plays, he thinks there is a good chance for an upside in TNH.
Concerning the economy, Cramer said, “…I am an optimist about what can happen. I don’t want to be considered a bull or a bear here. But I am an optimist. I think that things could work out over the next 18 months. We need housing to bottom…” Cramer said he was uneasy about China which he thinks is heading toward a severe recession. Cramer told another viewer that, given MA’s 10 point rally, he would wait for a pullback before buying.
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