Cramer's Mad Money - Oh, I'm a Lumberjack, Plum Creek's Okay (12/4/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Friday December 4.

Celgene (NASDAQ:CELG), Allos Therapeutics (NASDAQ:ALTH), Immunogen (NASDAQ:IMGN), Onyx Pharmaceuticals (NASDAQ:ONXX), Ciena (NASDAQ:CIEN), Dollar General (NYSE:DG), Family Dollar (NYSE:FDO), KKR (KFN)

Cramer said there isn't going to be much in the way of earnings this week, so investors should look to the Hematology Conference for ways to invest. Celgene (CELG) is expected to give positive data on Revlimid, its blood cancer drug, Onyx (ONXX) is giving 15 solid presentations, Allos (ALTH) is launching Folotyn, a treatment for T-Cell Lymphoma. Immunogen (IMGN) is going to introduce three products which demonstrate its Targeted Antibody Payload technology. Cramer is bullish on all four stocks.

He is also optimistic about the unemployment number, which shows a slowing of job losses. While 11,000 jobs this month still sounds like a big decline, the slowing of the employment bust may indicate the beginning of recovery, according to Cramer.

Ciena (CIEN) reports on Thursday and is expected to give some clarity on its battle over Nortel (OTC:NRTLQ). The acquisition plans have been hurting the stock, but Cramer thinks once the company dispels worry, the stock will go higher. Cramer would sell Dollar General (DG) ahead of its earnings, given bearish statements about discount retail from Family Dollar (FDO).

Globe Specialty Metals (NASDAQ:GSM)

Every portfolio needs some speculation to add spice; Cramer's speculation pick for Friday was Globe Specialty Metals (GSM) which will benefit from the resurgence of silicone after a long decline. Silicone is used in chemicals, solar cells, aluminum alloys and electronics, and the expected rise in the price of the commodity will be good for GSM. Since it is difficult for new companies to enter the silicone space, competition will be limited. Cramer says the stock is cheap, and trades at just $8.50 a share, and the company has $235 million in cash and only $32 million in debt.

The risk is in the fact that Globe Specialty Metals has not been public for very long, is 27% owned by private equity firms, and since the lock-up period expired in November, there could be significant selling at any time. Also, Cramer says there is no guarantee silicone prices will rise. However, in spite of the company's multiple of 20 times 2010 earnings, the stock is still cheap when considering its 62% growth rate. Cramer recommends taking a chance and buying Globe Specialty Metals.

Plum Creek Timber (NYSE:PCL)

With the real estate market finally coming back and with prices still low, Cramer would invest in the largest landowner in the U.S: Plum Creek Timber (PCL). He thinks the stock is grossly undervalued with estimates indicating that Plum Creek's land should be selling at a 77% premium to its current level. Cramer also noted the 5% dividend can pay investors to wait for this increase. Fifty-two percent of the company's revenues are from sales of timber, 25% are from real estate sales of non-core properties and 22% are from wood and fiber products. The company has been buying back stock now that shares are cheap. Cramer recommends viewers buy shares of Plum Creek as well, although he warned investors not to expect a dramatic rise in the stock in the short-term, since Plum Creek is a slow, steadily growing stock.

Mad Mail: Family Dollar (FDO), Bank of America (NYSE:BAC), L-1 Identity Solutions (NYSE:ID), Cogent (COGT-OLD), Novell (NASDAQ:NOVL)

Cramer told one viewer that although Family Dollar's (FDO) 3Q report was not bad and that the stock has bottomed, he doesn't see a compelling reason to buy. He praised one viewer for taking profits incrementally on Bank of America's (BAC) upward rise, and suggested he hang on to the core position in the bank. When a viewer asked about buying Novell (NOVL), Cramer rejected the idea because the company is not a pure play on identity solutions. Cramer prefers L-1 Identity Solutions (ID) and Cogent (COGT-OLD).


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