Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday March 15.
CEO Harold Hamm, Continental Resources (CLR)
With crude oil getting hammered and nuclear energy in doubt after the disaster at Japan's nuclear power plant, the best way to achieve energy is the old fasioned way: to drill for it. The discovery in the Bakken shale has been revolutionary, the largest find in 40 years. Continental Resources is the number one driller in the Bakken shale. Harold Hamm said he didn't realize the potential of Bakken shale when the company built its first well in 1989, but it was the latest technology that made such a huge find possible; "technology turned it on." Now the company has 30 stages of drilling planned for the future with 64% growth in Bakken drilling and an expectation to triple the amount of drilling there in 5 years. Hamm discussed the company's clean drilling and increased hiring, two steps that will tackle unemployment as well as environmental issues.
Cramer is bullish on CLR and said, "You are Saudi Arabia's worst nightmare."
With the Dow down 300 points on Tuesday as Japan was fighting against the worst nuclear disaster since Chernobyl, Cramer assured viewers "There will be better times, but we don't know how long it is going to take." He encouraged investors not to panic but to look for stocks that deserve to be higher.
There is reason to have a glass-half-full view: Dan Fitzpatrick, technical analyst at TheStreet.com noted that Japan's stock exchange is not performing as badly as expected, under the circumstances. When the financial crisis of 2008 hit, the Nikkei fell 31% below its 50 day moving average. In 2010, the Nikkei fell 12.7% below its 50 day moving average. However, after the tsunami and the nuclear reactor explosion, the Nikkei has fallen just 8% below its 50 day moving average. While the Nikkei could move still lower in the aftermath of the disaster, the fact it hasn't fallen more so far is worthy of note. The ETF EWJ (EWJ) fell on Tuesday only to rally back and close down just 2 cents.
Rising oil prices have been threatening consumer prices, but oil has actually taken a breather lately. Fitzpatrick thinks oil may be headed still lower. The daily chart for the light sweet crude index (SWEET) indicates, according to Fitzpatrick, that oil, which has dipped beneath its support level of $100, could go to $93. This low price will bring new buyers for oil.
Fitzpatrick expects a big move for Peabody (BTU) to the mid-90s, which means a 45% rise from its current level. From the end of 2008 to 2010, BTU rallied $36 only to give back 50% of its gain for the following six months before running up another $36. Fitzpatrick thinks BTU is in a resting phase and could easily rally another $36. The stock declined for four consecutive days, Monday to Thursday of last week, and dropped on massive volume to its low of $61. Fitzpatrick sees this level as support, which means BTU now has limited downside and dramatic upside. Cramer added there can be no doubt that demand for coal will rise after Japan's nuclear disaster, so the future looks bright for BTU.
Before the disaster in Japan, semis exploded last week with bad news about tablets, Finisar's (FNSR) disappointing quarter and a one-two punch delivered to the semiconductor space. However, at Xilinx's (XLNX) analyst meeting, the company told a different story, raised guidance and boosted its dividend 19%. While its yield might seem to be modest at 2.4%, many tech companies don't offer dividends at all. Xilinx has 50% market share in programmable chips, like blank tapes that allow the user to program chips themselves instead of relying on the companies. The company has less exposure to China than its competitors, which is good news, since Finisar cited China's slowdown as a challenge. The stock is up 47% since Cramer recommended it in August 2009 and 24% since the CEO last appeared on Mad Money.
Moshe Gavrielov said the future looks bright for semis because of bandwidth demand, emerging markets and the transition to programmable devices. Xilinx's specialized technology sets it apart from other semis. Even though tech looked troubled last week, Gavrielov admitted tech will have its ups and downs but the path of the bandwidth demand trend is going upward for the long term. The company has a small Japan segment which will not cause undue loss to the company. Finally, the CEO says Xilinx is a different kind of chip company because it emphasizes customer service as well as technology.
Cramer says Xilinx is an "unbelievable company" and thinks the fact that it is one of the few techs with the conviction to raise its dividend is reason enough to buy it.
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