Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday June 2.
Cramer has long urged viewers not to buy tanker stocks. His plea was even stronger on the news that the Commodity Futures Trading Commission is investigating John Fredriksen, owner of Frontline (FRO), for possible involvement in manipulating oil futures. With this news, all tankers are going to be painted with the same brush, and those who have not sold this sector already should get rid of the stocks.
There are many problems with tanker companies. They don't benefit from high oil prices, but on tanker prices, and with an excess of tankers, day rates are falling. These companies tend to have weak balance sheets since many do not own many tankers and have to pay to lease them. Therefore, they often issue secondaries to raise money and share prices fall. Tankers also have confusing ownership: Teekay Tanker (TNK) needs to lease their ships and the deal is better for the leaser than for TNK. If the company can't afford to pay for the lease, it may have to cut its dividend. Cramer told investors to stay away from Crude Carriers (CRU) which had its IPO last year, and the stock is down 29% since then. Frontline fell 49% even before the news of the investigation, and it will likely go lower. Frontline owns only 9 of its 77 tankers and management indicated there would be more pain ahead.
The only tanker stock Cramer would buy is Nordic American Tanker (NAT) which has a strong balance sheet and benefits from the weakness of its competitors by buying their tankers at bargain basement prices. Its 5% dividend is safe. For those who must own a tanker, NAT is the one to own, but the sector is generally a no-go area now.
Cramer took some calls:
United Technologies (UTX) is a buy.
Delta (DAL) and the rest of the airlines are not worth buying, especially with the direction of fuel prices uncertain.
International Paper (IP) is not your father's International Paper. The company is doing a "remarkable job and is in a unique position for whatever the world throws at them,' said Cramer.
Polycom (PLCM) is a leading independent provider of video conferencing technology that saves companies time and money. The stock moved up on a day the Dow dropped, and Cramer doesn't think the stock has moved enough since it just announced a deal to purchase Hewlett-Packard's (HPQ) teleconferencing division. The company also has a partnership with Microsoft (MSfT) and Polycom's stock has been on a tear since October; it has risen 119% since then. Cramer thinks the stock has more room to run on its strong revenues.
Andrew Miller discussed the benefits Polycom's technology provides companies; costs of conferences can be cut around 57% with the elimination of travel expenses. While Hewlett-Packard used to be a competitor, they are now partners. Polycom provides HPQ with its exclusive technology and HPQ resells the technology in its huge, global market. When asked if Skype is a threat to Polycom's technology, Miller emphasized that Skype is a consumer product and Polycom focuses on enterprise services.
Cramer says "Polycom has a bright future...I like a stock that hits a 52-week high in a very ugly period for the market."
CEO Interview: Mike Sutherlin, Joy Global (JOYG)
When the market gets ugly, nothing is more beautiful than a stock like Joy Global (JOYG) that can move up an entire sector with a strong quarter. The stock jumped 5.9% and proved that the notion that Joy Global is merely a cyclical stock is a simplistic assumption. While industrials have often been hostage to economic trends, the surge in emerging market growth is so strong that it transcends other macro news stories and temporary sell-offs. China is putting up a new coal plant every week, regardless of the season, and Japan is starting to rebuild after the natural disaster. Emerging markets are in need of more electricity which makes Joy Global indispensable for providing copper for wires and coal for power. The company beat earnings by 17 cents and revenues rose 18%. Joy Global raised guidance and said new orders are up 79%. The stock has risen 416% since Cramer got behind it in 2009, but has been knocked down unfairly in recent weeks.
CEO Mike Sutherlin discussed rising demand for mining in emerging markets and the company's growing project pipeline. Cramer is bullish on Joy Global.
Cramer discussed "roving bull markets," which can arise suddenly on good news about long-term trends. He reiterated his bullishness on industrials, led up by Joy Global's earnings. The buildout in emerging markets is surging ahead aggressively, and industrials are good long-term stocks to own on the trend. Meanwhile, defensive stocks are falling and will probably go lower. Retail also seems to be headed down on rising gas prices. Cramer suggested viewers get in on the Groupon IPO, since prices at the pump might make consumers more cost-conscious and desperate to look for new ways to save money through Groupon.
Cramer took some calls:
Solazyme (SZYM) is an incredible speculative stock that has had a big run. Cramer urged caution.
Cramer wonders when apparel companies will get their due. The obsession of shorts is with high cotton prices, which Philips Van Heusen (PVH) can pass on to consumers willing to pay up for its brands, especially Calvin Klein and Tommy Hilfiger. Strength in Macy's (M) is also good for PVH. While Ralph Lauren (RL) had a disappointing quarter, a large factor was management's caution on the conference call. RL's stock has mostly recovered from its recent sell-off, and VFCorp (VFC) is down 12 points from its high, mainly for the same reason as RL dropped: its management's cautious tone. RL would have been a good buying opportunity on its decline, and it is still a good time to buy VFC.
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