Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday April 5.
Gold is "worry personified," but there is no reason to be worried about where gold is going. Concerns about Portugal, revolutions in the Middle East, worries over inflation in China and in the U.S. are ongoing issues that will continue to provide a boost for the yellow metal. Cramer recommends SPDR Gold Trust ETF (GLD), Goldcorp (GG) which "makes money every day it puts a shovel into the ground," and NovaGold (NG), his favorite speculative gold play. NovaGold owns 50% of the largest gold mine in North America which is starting operations in 2015. Once all the world's problems are solved, maybe the gold bears will have a case. But that day isn't coming soon, and gold has more room to run.
Cramer has long been a proponent of natural gas and of high yielding stocks. MarkWest Energy Partners (MWE) is a natural gas gathering and processing company that has significant exposure to both oil and natural gas. The company removes contaminants from natural gas, refines the fuel and transfers it to larger pipelines. MarkWest has significant exposure to five core natural gas shales in the U.S., and is expecting to increase its production in the Marcellus shale by 20% in the next two years. CEO Frank Semple discussed how the company worked early on with Marcellus shale pioneer, Range Resources (RRC) and will continue its valuable partnerships to further develop the efficient transfer of liquified natural gas.
MarkWest's shares are up 425% since its IPO in 2002 and its distribution has increased 160% over the same period. Semple says the company will continue to increase its distribution as the company grows; "We have some of the best resources in the U.S." While the government seems slow to get behind natural gas, Semple is "bullish about the role natural gas will play in any long-term energy policy...it is a natural progression. Natural gas is cheap and abundant, and as T.Boone Pickens says, it is ours."
Cramer says MarkWest has one of the best records in the industry and should continue to grow and raise its distribution.
Texas Instruments (TXN) revived the moribund semiconductor sector with its takeover of National Semiconductor (NSM) at a huge 78% premium. Before the news of this takeover, semiconductors were in the house of pain because of lowered demand for chips. On this takeover news, these stocks have gone from total losers to stocks that have a chance to win.
Technical analyst Tim Collins took a look at Semiconductor HOLDRs (SMH) which saw a very difficult March. The ETF was strong until late February, when Hewlett-Packard (HPQ) gave some bad news about demand for chips, and on that data, it fell to $35 which became its support level. SMH bounced briefly, but plunged beneath $35, which became the new ceiling for the ETF. The stock has rallied on the Texas Instruments takeover of NSM, and Colins said if the ETF maintains at least a $35 level for a few days, it could go to $37.
Cramer thinks this takeover at such a fantastic premium has put fear in the hearts of semiconductor shorts, and could indicate more takeovers in the near future. Like Collins, he would take a wait-and-see attitude about semis, and if SMH holds a level of around $35, the chips could break out.
Cramer took a call:
CEO Interview: Kelcy Warren, Energy Transfer Partners (ETP)
Everyone should have a fuel pipeline stock, because these companies have exposure to rising oil prices without the risks and the vulnerability to commodity prices drillers face. Most of these pipeline plays, like Energy Transfer Partners (ETP), are master-limited partnerships, and return the lion's share of their profits to shareholders. ETP has a distribution of 6.8% and management has discussed increasing that amount. The company is focused on natural gas distribution, with a growing liquified natural gas segment, and propane.
ETP announced it would acquire natural gas assets from Louis Dreyfus, and CEO Kelcy Warren believes this acquisition should be accretive in the near term. He explained the investment as essential for ensuring ETP can provide the full package of natural gas services to its customers, particularly liquified natural gas. ETP's recent secondary offering should alleviate concerns about the cost of the acquisition. While the low price of natural gas has hit many natural gas companies hard, Warren says prices of liquified natural gas are increasing at a similar pace with crude, and the company looks for shales that produce "wetter" natural gas, the perfect material for the liquified version.
Addressing concerns about lagging domestic demand for the fuel, Warren says many refiners have begun producing blends with natural gas, so the pressure to export the fuel may decrease. The CEO added that an intelligent energy policy would be to adopt natural gas as a bridge fuel, and he expressed hope that the government will soon realize this.
Cramer says that while he would have wanted to catch ETP's secondary offering, it is still a good time to buy the stock which has growth and a strong distribution. ETP is an ideal conservative play on natural gas.
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