Cramer's Mad Money - United States Gas Fund Should Not Exist (9/10/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday September 10.

United States Natural Gas Fund Is Terrible Paper (UNG), Devon (DVN), Apache (APA), Anadarko (APC), Linn Energy (LINE), First Trust’s ISE-Revere Natural Gas (FCG)

Cramer urges anyone who holds the ETF UNG to sell immediately or they could suffer the same fate as those who invested in DXO, Deutsche Bank's oil ETF. Shareholders were deprived of a premium when a halt was placed on issuing new shares, and Cramer thinks the same will happen in the case of UNG. This fund does not even hold natural gas, but instead trades in near-month futures contracts, and amid all the rollovers, gains in natural gas prices can be lost. UNG is performing more poorly than natural gas and is down 28% while the fuel is hitting a 26% price decline. Cramer prefers buying natural gas stocks like Devon, Apache, Anadarko and Linn. For those who feel they must own an ETF, Cramer recommends FCG, which is up 5% over the last three months in spite of declines in natural gas.

Concerning UNG Cramer remarked: "I think it is a huge mistake. The thing shouldn't exist."

Procter & Gamble (PG), General Mills (GIS)

When picking stocks, Cramer would look to the bottom of the class, not at the stocks which consistently outperform. General Mills is like an A student that continues to get high marks. When General Mills announced a better-than-expected number, its share price inched up 36 cents. However, Procter & Gamble, which reported a bad quarter last time around, merely met expectations and the stock price rose $2.28, or 4%. Cramer likened Procter & Gamble to a D student who finally got a B-, while General Mills' straight A performance makes The Street bored; “Investors only care about what they don’t expect," said Cramer. He is bullish on Procter & Gamble because it has further to run and is a good play on the weak dollar.

American Tower (AMT), Crown Castle (CCI), Apple (AAPL), AT&T (T), SBA Communications (SBAC), CommScope (CTV)

Since iPhone customers are "data guzzlers" and complain about delayed messages and slow speeds due to pressure on the network, AT&T is undertaking an $18 billion expansion of its cell towers. Beneficiaries of this expansion could be American Tower or Crown Castle. Cramer also would take a look at SBA Communications and CommScope, which derives 60% of its revenue from building wireless networks.

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Comments

[receipt:]

Here's how to play the explosive move of natural gas to the upside. Buy Horizons BetaPro NYMEX Natural Gas Bull Plus ETF (HZBBF)! After expenses it seeks to correspond to two times (200%) the daily performance of the New York Mercantile Exchange (NYMEX) natural gas futures contract for the next delivery month. In the last two days, if you had followed my advice on this Toronto, Canada based ETF, you would have gained significantly. More to come.....all aboard!

Sep 11 09:38 AM

[Mad Hedge F...:]

khk. Just when I get comfortable with my view on Natural Gas, I get a scratchy, reverberating cell phone call from one of the major formations telling me that I’m being way too bullish. Gas won’t bottom at $2. The free fall will continue until it hits $1. National storage will be completely full imminently top out, and when it does, theproducers will have to shut down completely. Since these guys are leveraged up the wazoo, this will trigger a string of bankruptcies, and the majors will fall like dominoes. A hedge fund bust won’t define thisbottom, as these guys are all playing from the short side. UNG can’t step in as a buyer of last resort, as the SEC won’t let it issue morestock, and the current shares are trading at a ridiculous 20% premium.One thing we do agree on is that the bottom will look ugly, whatever the spark is. You often get Armageddon type views near market bottoms,but this guy has been dead on right until now. Well, it takes two to make a market. Conclusion: keep NG nailed to your screen, as the widow maker is where the volatility lives.

Sep 11 09:51 AM