Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday December 8.
Cramer said Tuesday’s rally wasn’t just short-covering. President-Elect Obama, “the man with the Midas touch,” just said the word “infrastructure” and the entire sector jumped: Caterpillar by 11%, Martin-Marietta by 15% and Vulcan by 11%. He said the weekends of worrying over which financial will collapse are over. There is more good news; China finally rallied and oil is up from $40 a barrel and shorts are covering. Hedge fund selling has finally relaxed and some are halting redemptions which were bringing down stock prices. Cramer would sell into the rally. While Cramer is bullish, he sees declines down the road and says there will be time to buy these winning infrastructure names. Cramer would sell into strength and buy defensive stocks that have yet to see a lift.
Cramer unveiled his dividend portfolio designed to provide shelter in a stormy market:
Nordic American (NAT): Nordic is a play on expectations that oil will be higher in a year and the buying up and storage of oil in anticipation of this move. Tankers are few because of strikes in France, and this is good news for NAT which has a generous 9.5% yield.
Verizon (VZ): Always a Mad Money favorite, Cramer revisited Verizon because he thinks FiOS has potential as millions of customers are signing on. Verizon is the sole distributor of RIMM’s Blackberry Storm, owns half of Verizon Wireless and yields 5.3%.
Great Plains Energy (NYSE:GXP): Utilities are great investments because of their stability and their huge dividends; Great Plains Energy yields 9.2%. This company has a steady customer base in Western Missouri and Eastern Kansas and can easily raise rates. Also, Great Plains is involved in many potentially successful projects, involving cleaner coal, wind power and retrofitting existing plants.
Kinder Morgan Partners (NYSE:KMP): Cramer likes this company with an 8.9% yield because it is a master limited partnership and has to return the lion’s share of its profits to its shareholders. Since Kinder is an oil and gas transporter rather than a producer, it is not affected by fluctuations in the price of oil.
Bristol Myers Squibb (NYSE:BMY): Cramer likes BMY’s pipeline, along with its treatments for psychosis, cancer, HIV/AIDs. Although its $4 billion cardiovascular drug, Plavix, may lose patent production in 2010, Cramer thinks its other drugs will compensate for this loss. In addition, BMY may be a takeover target and pays a 5.4% dividend while you wait.
CEO Interview: Gale Klappa, Wisconsin Energy (NYSE:WEC)
Wisconsin Energy announced it will raise its dividend 25% to 3.3%. However, at the same time, the company said electricity sales are expected to decline in 2009. So how can the company raise its dividend while it expects its sales to slow down? Klappa said his company is in the last year of a major infrastructure upgrade cycle and will be able to reduce capital spending by $400 million which can be used for the dividend, and any unexpected profits can be used to raise the dividend further or to repurchase stock. Cramer said Wisconsin Energy is the idea type of stock to own in a recession.
Fortune Brands represents the best of both worlds. If housing bottoms on June 30 2009, as Cramer has predicted, the company’s faucet and cabinet business will be strong. In the meantime, the maker of Jim Beam and other liquor brands should not see a decline in sales, and people might even drink more in a recession. The company is flush with cash and has an accidental high yield of 4%.
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