Cramer's Mad Money - Copious Copano (4/28/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 28.

Goldman Sachs (NYSE:GS), Copano (NASDAQ:CPNO), Kinder Morgan Partners (NYSE:KMP), EOG Resources (NYSE:EOG)

Cramer was looking for a stock that is immune from Goldman Sachs (GS) and the PIIGS (Portugal, Ireland, Italy, Greece and Spain) as their houses are about to get blown down by the big bad wolf of debt.

High-yielders are a good bet because "dividends can't be rigged" and they are expensive to short. One of Cramer's favorite dividend stocks has been Kinder Morgan Partners (KMP), but now it has run up too far, 42% since October, and Cramer would look for another dividend play.

Another high-yielding natural gas play, Copano Energy (CPNO), yields 9.2%, which is 44% higher than KMP's dividend. This natural gas pipeline play has more risk than relatively conservative KMP, and is a midstream company, which gathers gas through pipelines, processes and transmits it through hundreds of miles of pipelines; its 7 natural gas plants produce 2 billion cubic feet a day. Copano has 55% exposure to the Eagle Ford and Barnett shales of Texas, 42% to the Woodford shales of Oklahoma and 3% to the Rockies. Copano has a deal with KMP to build a gathering pipeline in South Texas. This should be completed by the end of the year along with a pipeline, which should be finished by this summer, to connect more Texas shale to its Houston processing plant. Copano also has a long-term deal with EOG Resources (EOG) for collecting and processing natural gas.

Since Copano has natural gas prices hedged, it has a higher risk and higher return potential than Kinder Morgan.

PIIGS vs. Bulls: Boeing (NYSE:BA), Home Depot (NYSE:HD), Intel (NASDAQ:INTC), Cisco (NASDAQ:CSCO), AT&T (NYSE:T)

Cramer would pay more attention to the rising bull market than the PIIGS slaughterhouse. He insists that he is not worried about Europe and thinks the domestic economy is strong enough to allay fears at home. AT&T (T) is showing signs of a bottom for landlines while wireless is exploding. Cramer says he just can't walk away from Boeing (BA) which he thinks is beginning a 7 year aerospace cycle. He noted strength in Home Depot (HD) and thinks it also could be in a multi-year move. Even though Washington still holds a big stake in JP Morgan (NYSE:JPM) it is improving market share and is regaining its reputation. Intel (INTC) and Cisco (CSCO) are in better shape than they were a few years ago, thanks to new products.

Cramer would leave the PIIGS in the barn and run with the bulls.

Charles Koppelman, Chairman of Martha Stewart's Living Omnimedia (NYSE:MSO), PetSmart (NASDAQ:PETM), Macy's (NYSE:M)

Even though Martha Stewart Living had a smaller than expected loss: 7 cents compared to TheStreet's estimate of 9 cents, and some stronger-than-expected sales, the stock was down 26 cents on Wednesday. Cramer recommended buying the stock on a pullback in January, and while the stock did decline from $8 to $5, and has risen since, it hasn't quite reached its previous level. Cramer thinks MSO has the potential to hit $8 again.

The company generates revenue from publishing and television programs, merchandising and brand licensing. The latter generates 80% of MSO's revenues. Cramer thinks MSO has more room to run, especially since it scrapped its deal with K-Mart and replaced it with Home Depot.

Charles Koppelman talked about how the magazine business was looking better and that advertising revenues are up. Looking forward, he said September will be an "inflection point" with media partner Hallmark in place, in addition to the deal with PetSmart (PETM). Home Depot should be rolling with Martha Stewart products as well as Macy's (M), where Martha Stewart brands rate number one in home goods. Koppelman said the licensing is so profitable because it is "a high-margin business. We don't manufacture anything."

Cramer concluded the interview by saying he thinks MSO will go from $6 to $8.


Jim Cramer was up 31% in 2009. Click here now to trade alongside him.

Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.