Cramer's Mad Money - Coal Is Dead (2/1/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday February 1.

Peabody (BTU), Arch Coal (ACI ), CSX (NYSE:CSX), Union Pacific (NYSE:UNP)

The coal industry and railroads are sending mixed signals about the future of black gold, but one needs only to look to China to realize that coal is not the best investment right now. China is a major consumer of coal, but the government is putting a freeze on lending to prevent a ruinous bubble that may devastate the economy. In spite of this, Peabody (BTU) painted a rosy picture of its business while Arch Coal (ACI) admitted things "weren't so hot."

A full 45% of railroads' freight is coal, so rails should know what is going on in the business. Again, there were mixed messages; CSX (CSX) said things were slowing down for coal while Union Pacific (UNP) was more optimistic. Cramer urged investors to keep in mind that there are many uses for coal, such as steelmaking and coal for utilities. Still, Cramer doesn't see much of a future for coal, unless Obama is going to throw everything behind so-called clean coal and subsidize it like mad, but Cramer wouldn't bet on it. Only a resumption of Chinese spending can make Peabody safe. Cramer concluded "The industry is dead for now."

JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS), Exxon Mobil (NYSE:XOM), Cypress Semiconductor (NASDAQ:CY), Apple (NASDAQ:AAPL)

Cramer explained the 118 point rally in the Dow on Monday was initiated by a upward move in Obama's most hated stocks, JP Morgan (JPM) and Goldman Sachs (GS). Once these stocks saw an upside, it looked the the pressure from Washington was off and other stocks, such as Exxon Mobil (XOM), Cypress Semiconductor (CY) and Apple (AAPL) went higher. However, Cramer wouldn't expect consistent gains in stocks; “I think the bar is set too high for a sustained move up,” Cramer said…"2010’s not going to be as much fun or as profitable as 2009. The hope going forward is that unemployment does go down on Friday and that the President has finished venting his rage at Goldman.” Cramer would take some gains in market leaders.

CEO Interview: Murray Gerber, EQT (NYSE:EQT)

It is no secret that Cramer is backing natural gas as a clean, cheap, plentiful bridge fuel that can generate jobs. On Monday, he discussed EQT (EQT) which is one of the cheapest producers of natural gas with total production costs of just $2.30 per thousand feet. The company reported a strong quarter on Thursday. EQT's production increased 19% in the fourth quarter year over year and is planning to double its production in Marcellus shale in 2010. EQT has 26 million cubic feet of proven reserves.

Gerber said natural gas is not only for homes and trucks, but thinks in five years, every car in America could be running on natural gas and 2-3 million jobs would be created. He dismissed questions of the effect of drilling on the environment and said no study has been performed using current technology. Cramer thinks EQT is ready for significant upside.

Mad Mail: Trinity Industries (NYSE:TRN), Vale (NYSE:VALE), Caterpillar (NYSE:CAT)

When a viewer asked why Trinity's (TRN) stock price is falling, given Obama's plans to reform the rail system, Cramer says the company is too levered to wind power, which is not going to be a hot area now that the price of oil is falling. Cramer told another viewer he is bearish on Vale (VALE) and Caterpillar (CAT) given both companies' dependency on China. Cramer said 2010 does not look like it is going to be a great year for the market, but that doesn't mean investors should hibernate for the winter; 2010, "Let's take it case by case and not blow out of the whole market..."


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