Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday July 12.
The Worst is Over: Banco Santander (STD), BP (BP)
Cramer is convinced the worst is over and that the rally last week was justified. While financial legislation hasn't passed yet, we know the details, and the uncertainty that was crippling financial stocks is over. Banco Santander (STD) has made a magnificent 50% jump since June 2nd, and Cramer applauds its decision to diversify away from Spain. He predicts the bank will pass its upcoming stress test. China's problems were solved by a soft landing, and the euro has bottomed and rebounded. The only thing left to fix is BP's (BP) oil spill and unemployment, but Cramer thinks it is likely BP will finally succeed in its effort and has seen signs that Obama is backing off on businesses.
“I think we’ve seen the lows for the year,” Cramer said, “and I am a buyer, particularly if we get any pullback of 3% to 5%."
How could the worst-performing stock in the worst-performing sector be a buy? If the stock is as good as Verizon (VZ). Cramer thinks Verizon is getting punished for its previous lackluster quarter, hence the 21 analyst "holds" and only 13 "buys," but Cramer thinks the company will redeem itself when it reports next Friday.
Verizon owns 55% of Verizon Wireless, the second-largest carrier in the business, and there are very credible rumors flying that Verizon will begin selling Apple's (AAPL) iPhone in January 2011. This may make Verizon the leader in market share gains for the industry.
Given that only 17% of Verizon's users have genuine smartphones, there is plenty of room to grow in this area. The company is rolling out its fourth generation wireless LTE which will cover the 30 largest cities in the country. FiOs, the company's triple play of voice, cable and internet saw a 40% increase in sales last year, and its sales of smartphones running on Google's (GOOG) Android rose.
If for some reason The Street doesn't like Verizon's quarter, Cramer would recommend buying the stock on weakness, especially given Verizon's generous 7% dividend.
There's too much natural gas, but that's a good thing for natural gas storage stocks. Cramer thinks that as the clean, cheap alternative to oil will be adopted, storing natural gas will become a major issue. Two natural gas storage companies, PAA Natural Gas Storage (PNG) and Niska Gas Storage (NKA) had their IPOs this spring, but PAA is up 12% and Niska has declined 8%. This is due to PAA's strategic location, with one facility at the intersection of eight high-capacity natural gas pipelines.
PAA is a master-limited partnership and returns the bulk of its profits to shareholders in the form of dividends. The company plans to increase capacity by 36% by 2012 and is doubling the size of one facility. All of PAA's revenues come from fees, which means it is not dependent on the price of natural gas.
Currently, PAA is seeing an "open season" for bidding on its Pine Prairie facility, and is taking bids for contracts for 2 billion cubic feet of storage starting next year. Cramer would pay attention to what happens with these bids and would buy ahead of its earnings report on August 4.
Is Washington Becoming a Friend to Business?
The White House might be reversing its "anti-business" stance, which is good news for The Street. Cramer discussed an article in The Wall Street Journal that indicated the President wants to discuss with high profile managers which government regulations are helping and which are hindering job growth. Treasury Secretary Timothy Geithner told Larry Kudlow that he plans to keep taxes on capital gains low. However, Cramer says more should be done; the government should acknowledge that regulations have been an obstacle to recovery and should look at other countries which have already recovered while America has been left behind; “I think a more pro-business, pro-stock-market attitude will go a very long way to creating real jobs, not public-sector jobs by the fourth quarter of 2010.”
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