Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday September 30.
Even on news of a possible upcoming government shutdown, the Dow dropped 129 points, which is not quite the sell-off many were expecting. Cramer thinks this could be because the ugliness has not quite started, and he would sell stocks and buy them back when stocks drop further. Since Ben Bernanke said that tapering will not happen right away, it might be worth buying bond equivalent high-yielders, like Kinder Morgan Partners (KMP) on a huge drop. With China and Europe improving, cyclical stocks have been performing well.
Cramer took some calls:
BlackBerry (BBRY) has a complicated structure, "a closed architecture in a world where people like open architecture," which makes BBRY vulnerable to competition.
Mosaic (MOS): Cramer doesn't think the agriculture stocks are strong, and is concerned that the government could cut subsidies.
Zynga (ZNGA) is a speculative buy for its management, not merely as a takeover target.
Zillow's (Z) stock ran from $20 to $100 from the time it came public 2 years ago until a disappointing earnings report brought the stock down to $83, even though revenues were up 68% yoy. The stock recovered then got hit again after a secondary offering. People are worried that the cooling of housing prices will hurt Zillow. CEO Spencer Rascoff doesn't feel his company's performance depends on housing starts; "We are a media company ... we are impacted somewhat ... but we are not a brokerage." The company powers Yahoo's (YHOO) real estate site, and while many real estate agencies tried to compete with Zillow, they now want their listings on Zillow.
7 Niobrara Shale Plays: Anadarko Petroleum (APC), Noble Energy (NBL), PDC Energy (PDCE), Bonanza Creek (BCEI), Bill Barrett (BBG), Whiting Petroleum (WLL), Carrizo Oil & Gas (CRZO). Other stocks mentioned: EOG Resources (EOG), Marathon (MPC), Halcon (HK)
The Niobrara shale may be the next revolutionary shale play. However, it has a complicated history. EOG Resources (EOG) gave up drilling there because of the hit or miss nature of the resources; some places produced a substantial amount of oil while other places were nearly dry. There is one section of the Niobrara shale in Colorado where drillers are seeing astonishing rates of return. Cramer discussed companies that have exposure to this area:
Anadarko Petroleum (APC) has enough exposure to the Niobrara that the shale could be a needle mover for the company. It has increased its production 25%.
Noble Energy (NBL) is expanding its drilling in the Niobrara and has increased production by 50%.
PDC Energy (PDCE) is closer to a pure play on the Niobrara, and the upcoming results from pilot wells in October could be a catalyst for the stock. Since its cash flow doesn't quite cover its cap ex and it might have to raise capital, the stock is a speculative play.
Bonanza Creek (BCEI) has doubled its production and boosted its reserves by 20%. The company increased its rig count.
Bill Barrett (BBG) has had strong results from its wells and is expecting to drill another 60 wells by the end of the year.
Whiting Petroleum (WLL) has sold assets to broaden its exposure in the Niobrara.
Carrizo Oil & Gas (CRZO) expects to drill 20 more wells in the shale in 2013.
Cramer took some calls:
Halcon (HK) has been awful, but Cramer believes in its management.
Marathon (MPC) is not good. Cramer would avoid refiners.
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