Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday November 4.
CEO Interview: Greg Lucier Life Technologies (Pending:LIFE)
Cramer spoke with Greg Lucier CEO of Life Technologies, which was formed two and a half years ago when Invitrogen acquired Applied Biosystems. The stock has been a laggard, but after its better-than-expected quarter in October, LIFE has been on a tear. It is still cheap and trades at 11 times next year's earnings with a growth rate of 14%.
Greg Lucier demonstrated a genome machine, which will "revolutionize" medical care and biosciences. The use of chips and chemicals means recurring revenue for the company in a field where there is virtually no competition and most of Life' s devices have patent protection. A full 90% of life science labs use LIFE's devices, and demand is growing along with the number of tests for drugs and food. The company is expanding aggressively in Asia with 40% year over year growth in China alone. Cramer thinks Life Technologies is a great story and is a terrific defensive stock.
High Yielding Stocks: Verizon (NYSE:VZ), Kinder Morgan (NYSE:KMP), UIL Holdings (NYSE:UIL), Eastgroup Properties (NYSE:EGP), Altria Group (NYSE:MO), Lynn Energy (NASDAQ:LINE), Windstream (NASDAQ:WIN), HCN (NYSE:HCN), ConEdison (NYSE:ED)
As bond prices are being put through the meat grinder, investors need high dividend stocks that have a better return than bonds. Cramer chose favorite dividend picks in five different areas; telecommunications, energy, utilities, real estate and financial and consumer names.
It isn't just the size of dividends that matters, but the safety. Cramer likes Linn Energy (LINE) with a 7.1% yield and hedged oil and gas, but Cramer thinks Kinder Morgan Partners (KMP) is a safer alternative with a 6.3% dividend. The company may raise dividends next year and is building a new pipeline in the Marcellus shale.
In telco, Cramer thinks Windstream (WIN) is outstanding with a 7.1% yield and growth momentum. However, a safer choice is Verizon (VZ) which will carry the iPhone next year, has a dividend of 5.9% and boosted it recently by 2.3%. Utilities are known for their extremely stable cash flows and large dividends. ConEdison (ED) has a 4.9% yield and has raised its dividend for 36 consecutive years. An even more conservative play is UIL (UIL) with a 5.8% dividend. UIL also has an exciting story, since it is set to buy Spanish assets that may double the size of the company.
REITs have been shelled, and Cramer would consider buying two on weakness: a healthcare REIT, HCN (HCN) with a 6.1% yield and an expectation of accelerated dividend growth, and Eastgroup (EGP), an industrial warehouse REIT which has raised its dividend 123 consecutive times. Cramer prefers Eastgroup to HCN and has observed that every time Eastgroup's yield has hit 5% (it is currently yielding 5.1%) the stock has outperformed.
Finally, Camer recommended favorite dividend stock, Altria (MO), which yields 6.2% and has already raised its yield by 11.8% since the beginning of the year. Cramer would sell bonds into any strength, buy dividend stocks and reinvest yields to maximize the return on investment.
Stay in the Game
Cramer once again encouraged investors to "stay in the game," and the best way to benefit from up and down days is by staying diversified. Investors should own a wide range of stocks including high dividend plays, gold, and momentum stocks. Even on tranquil days, if investors are over or under invested in one or more areas, a portfolio could wind up in trouble.
The individual investor can mimic the action of hedge funds and use sector rotation, or taking holdings out of one sector and putting them in another. While this may involve some pain, it is like a "pinprick" compared to the suffering involved when one does not diversify.
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