Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday October 4.
On a down day like Monday, stocks that go up usually have catalysts driving them. F5 (FFIV) was up on talk of a takeover, and Morgan Stanley put a "buy" rating on Ford (F); both stocks rose (Cramer mentioned that he recommends buying Ford's Preferred Shares (F.PS) which offer a 7% yield.) However, Wal-Mart (WMT) which has been stagnant and usually declines on down days rallied on Monday. Cramer cited seven reasons for this action:
1. Wal-Mart bought Massmart, the third largest retailer in Africa for $4 billion. Wal-Mart has been the "essence of saturation" in the U.S. and badly needs to extend its reach overseas.
2. WMT's multiple is now 2 points lower than its historic level. With a multiple of 12, the stock is cheaper than many other stocks in the S&P.
3. Comps will be good this year because same store sales for last year were so bad.
4. WMT has a lot to offer shareholders. It still has $10 billion of stock to buy back. While the dividend is a mere 2.3%, Cramer predicts the company will raise the dividend.
5. Wal-Mart is bringing back actionality in the form of special promotions.
6. The company is expanding its selection of new products.
7. Wal-Mart is improving its own brands.
Cramer concluded "Wal-Mart may just be the retailer to own from now until the year's end."
While stocks were up in September, it was hard to find bargains, but there is no doubt that natural gas stocks are cheap. However, this is for good reason; natural gas has dropped to $3.77 and companies are continuing to drill. Up until now, Cramer's sole pick in the natural gas space has been Chesapeake (CHK), but he is adding Devon (DVN) to the list because it is too cheap to pass up. At $64, Devon executed "one of the absolute best timed asset sales in history," since it got rid of its offshore assets right before the BP (NYSE:BP) oil spill. With the $8 billion the company has raised, it has paid down debt and is buying back stocks. While Devon is focused on finding gas in the long-term, while the price of gas is still low, the company is focusing more on oil.
Devon beat estimates by 13 cents and is embarking on a major oil sands projects; This is not one of those inflexible natural gas companies that's made a suicide pact to keep drilling for gas no matter how low the price goes. Devon's smart, Devon's flexible... and I'm thinking that it's a buy down here."
John Richels said the company has always aimed to create a balance between oil and natural gas holdings; currently the company is 60% oil and 40% natural gas. He said most of the company's natural gas is hedged for next year. Richels expressed disappointment that the government hasn't made more of an effort to embrace natural gas as an alternative fuel. Richels also dismissed environmental concerns with drilling natural gas.
iShares MSCI Brazil ETF (NYSEARCA:EWZ)
Usually investors need to choose between growth and dividend, but Cramer says iShares MSCI Brazil ETF (EWZ) is the best of both worlds with a 3.3% yield and fantastic exposure to a rapidly growing economy. While things are starting to look better in America, the results are mixed, whereas Brazil's growth is unmarred by slowdowns. The economy is growing at an annual rate of 4% and its GDP grew by 1.2% from the previous quarter and 8.8% from the previous year.
The growth of Brazil's middle class is like that of America in the 50s and 60s, as demand for consumer goods increases. "This is a country where people want to borrow and banks want to lend." It is hosting the 2014 World Cup and the 2016 Summer Olympics. While Cramer doesn't usually recommend ETFs on Mad Money, EWZ has "so much wheat and so little chaff" that it is worth buying.
Mad Mail: Luluemon Athletic (NASDAQ:LULU), Maidenform Brands (NYSE:MFB), Salesforce.com (NYSE:CRM), Oracle (NYSE:ORCL), Weyerhaeuser Co. (NYSE:WY)
Cramer told one viewer that he isn't concerned that mutual funds own 58% of Luluemon (LULU). He thinks Maidenform Brands (MFB) is a good long-term story. While Salesforce.com (CRM) is a great company, Cramer dismissed speculation that Oracle (ORCL) might be a buyer. Cramer predicts Weyerhaeuser's dividend is going to be around 3.5% to 3.8% and would buy.
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