Cramer's Mad Money - Obama's Biggest Enemies (5/21/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday May 21

Obama's Biggest Enemies: Capital One Financial (COF), Southern Company (SO)

Cramer said the decline on Thursday was caused by the President's tough talk against certain sectors. Since Obama has demonstrated his ability to be a powerful market mover and a leader who implements his plans, Cramer would beware of certain sectors Obama considers to be inimical to his plans: credit card companies, coal, steel, utilities and drug companies. He suggested taking profits in these sectors until Memorial Day. Obama has plans to limit fees of credit card companies like Capital One Financial.

Anything having to do with carbon: coal, steel or utilities, should be sold, according to Cramer, and even China cannot save the likes of Southern Company from declines. The healthcare sector is engaged in some serious cost-cutting which may hurt shareholders as it feels threatened by Washington; "Obama's threats are real and investors need to pay attention."

Sell Block: Northrop Grumman (NOC)

One sector Cramer initially thought was on Obama's enemy list, but is actually a friend, is defense. Cramer confessed he made the wrong call on Northrop Grumman because he was worried Obama would cut defense. In fact, defense spending has increased 4% over last year and NOC has raised its dividend by 3 cents. Backlogged projects, including the construction of 8 submarines, are now in production. Northrop Grumman plans to increase profitability, expand margins and cut costs. Cramer says he believes in the management which knows how to reduce risk and maximize reward. He thinks the stock is a buy, especially under $43 with a 4% dividend.

Natural Gas Is Back: Anadarko Petroleum (APA)

According to Cramer's rule of thumb that natural gas usually trades 6 times lower than oil, natural gas, which is now 16 times lower than oil, is seriously undervalued. Cramer thinks natural gas will find its way back into favor as a bridge fuel between gasoline and alternative fuels. His favorite stock in the group is Anadarko Petroleum, which is up 12% since January and is likely to go higher when the effects of its secondary offering are felt and it can clean up its balance sheet. While shareholders suffered temporarily from the secondary offering, ultimately the move was necessary to prepare Anadarko for consolidation in the industry. The company is 65% levered to natural gas, is flush with cash and has 10 new discoveries across the globe.

Andrew Liveris Redeemed: Dow Chemical (DOW)

Cramer made a rare release from his CEO Wall of Shame. He had confined Dow CEO Andrew Liveris for his botched acquisition of Rohm & Haas. However, since then the CEO is doing everything in his power to make the merger work and is issuing stocks and bonds to raise more cash. While Cramer released Liveris, he warned viewers that there would be a new addition to the Wall of Shame next week.

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Comments

[User 217948:]

APA is Apache Corp, not ANADARKO

May 22 07:59 AM

[Gravity404:]

APA and APC are both great plays long term. short term i would wait for this latest shake down to finish and pick them up a little cheaper.

My question is how China can save SO?? The price of a cup of tea in China or a Kilowatt hour in Atlanta???


On May 22 07:59 AM User 217948 wrote:

> APA is Apache Corp, not ANADARKO

May 22 10:23 AM

[David W. Mi...:]

This is the 2nd time you show Anadarko's symbol as APA.....which is Apache !

May 22 12:36 PM

[realold:]

Let's see, Cramer, stay away from anything carbon but buy NG. Hum, though much cleaner, is natural gas not composed of carbon and hydrogen? If APC = APA, then NG not= carbon?

May 23 12:56 AM