Cramer's Mad Money - 5 Ways to Save Banco Santander (6/3/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday June 3.

Banco Santander (STD), PNC Financial Services (NYSE:PNC)

Cramer has called Spanish banks the "canary in the coal mine" of the European contagion and gave the following message to Europe "You fix Santander, you eliminate a major problem." He outlined a five-point plan for saving the bank:

1. Slash the dividend, and save $5.9 billion.

2. Issue a secondary offering to raise $5 billion

3. Sell Sovereign, Santander's U.S. business. Cramer thinks PNC Financial (PNC) could pay 1.5 times book value and the deal could raise $8.5 billion. In addition the bank could sell its valuable assets in Latin America.

4. TARP-style bank reform which will give the government preferred shares with smaller interest rates than in the U.S.

5. Have Spanish bond portfolio guaranteed by the EU. Cramer says this advice is for other European banks as well.

“Do these five things,” Cramer said, “and, voila, we have just saved Banco Santander and made it again one of the strongest banks in Europe.”

Chipotle Mexican Grill (NYSE:CMG), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), Deckers (NYSE:DECK), Intuitive Surgical (NASDAQ:ISRG), Express Scripts (NASDAQ:ESRX)

Thursday was a strange roller coaster of a day on The Street and Cramer recommended looking at what held up best through the volatile action. He identified 7 stocks that rallied the hardest, and saw action in these stocks as a sign of stability which will help investors weather a negative unemployment number predicted for Friday, as well as other economic woes:

1. Chipotle Mexican Grill (CMG) is expanding internationally.

2. (NYSE:CRM) is developing Facebook and Twitter-style products for private enterprise.

3. Deckers (DECK) has winning products like UGG boots and the Teva sandal.

4. Apple (AAPL) is not over-owned; we have "just scratched the surface," said Cramer.

5. Netflix (NFLX) is the "cult stock of the generation."

6. Intuitive Surgical (ISRG) has the Da Vinci machine that makes surgery quicker and cheaper. Its high 33 multiple is counterbalanced by its 25% growth rate.

7. Express Scripts (ESRX) will help keep drug prices down. It has a multiple of 21, but has a 20% growth rate.

An acronym of these stocks (not necessarily in the order discussed) is C.A.N.D.I.E.S., a sweet addition to any portfolio.

CEO Interview: David Demers, Westport Innovations (NASDAQ:WPRT)

Natural gas companies "can make you fortunes" declared Cramer; the one thing that was holding them back until now was lack of support from Washington. After Obama included natural gas along with nuclear as a solution to America's energy problems, Cramer sees new hope for natural gas.

Westport Innovations (WPRT) not only makes engines that run on natural gas, but produces equipment that converts trucks that run on diesel to those that function with natural gas. The company is a supplier to the top-producing engine and truck manufacturers worldwide.

Concerning Obama's endorsement of natural gas, Demers said it needs to be clear that we do not have an energy problem 20 years from now but today. Natural gas has the advantage of being "clean, cheap and abundant." The American Power Act, he continued, that will require 20%-30% of engines to run on natural gas should not be a 5 to 10 year plan, but a "right now" plan. A natural gas engine costs the same as a diesel engine, with $1 less per gallon paid at the pump. Demers said his company is ready to meet rising demand, is the premier producer of natural gas engines in the industry.

A Freeze on Financial Innovations

If the double and triple levered "ETFs of mass destruction" weren't bad enough, there are new ETFs threatening to go public; these will mimic hedge fund trading strategies and have been described as "insanity" by Vanguard founder John Bolge. High frequency trading, while it creates liquidity, has turned "the playing field into a war zone," and the growing list of financial innovations are driving the retail investor to the sidelines.

Cramer called for a moratorium on these products so the SEC can take the time to examine how much they are really worth. Cramer compared these products to "portfolio insurance" in the 80s, which didn't actually protect porfolios from downside, but created downside. “Portfolio insurance went away,” Cramer said. “These instruments should, too.”


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