Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday June 20.
Cramer has dedicated the week to examining the 5 Year Plans of various companies. He kicked off Monday's segment with Honeywell (HON), which is a very diversified company in the aerospace, climate control, special materials and auto parts sectors, to name a few. Honeywell has gained 30% since September, but is up only 1% since March. CEO Dave Cody is optimistic that the company can reach its targets for 2014. The company plans to increase annual revenue growth from 6-8% to 7-9%, boost its margins 75 points, up from its former target of 60 points, reduce cycle times by 30%, reduce product costs by 50%, increase revenues from emerging markets from 23% to 30% and more than double its product sales from $4.1 billion to $9 billion by 2014. Cramer is confident Honeywell can meet its targets, since it has significant exposure to the energy conservation theme. Since companies are looking to cut energy costs regardless of the economic climate, Honeywell is likely to perform well in any scenario. Honeywell reports earnings on Wednesday, and Cramer would get in before the quarter and buy more on any weakness.
Cramer took some calls:
Goodyear (GT) is a sell on worries about commodities. Cramer has been consistently bearish on this stock.
Polypore (PPO) has a lot of untapped value; "In a very difficult tape, I like Polypore."
Golar LNG Limited (GLNG) is a transporter of liquified natural gas. While Cramer doesn't like the shipping sector in general, he thinks the export of natural gas is a good long-term story. However, since GLNG has a messy balance sheet and has doubled so far this year, he would prefer to play the natural gas trend with Chart Industries (GTLS), which produces technology that transforms regular natural gas into the liquified form. The stock is so far off its highs that it is worth buying.
Berkshire Hathaway (BRK.A) is trading close to its 52-week low and is a buy, especially if there is a stock buyback on the horizon.
Corning (GLW) is subject to the vicissitudes of the optical business. The company needs to be more proprietary and less vulnerable to competition. Its gross margins are not good, but Cramer likes GLW's management.
Monster Worldwide (MWW) was hurt by the LinkedIn (LNKD) IPO, but it is unlikely to be taken off of the S&P 500, even though it is one of the poorer performers in the index. Cramer thinks MWW still has a good story.
CEO Interview: Charif Souki, Cheniere Energy (LNG)
The U.S. is the largest and lowest-cost producer of natural gas, but the American government is not doing anything to make the use of natural gas more viable domestically. Demand for natural gas abroad is significant and growing. Domestic natural gas companies that can work through the complicated process of liquefying the fuel and exporting it can expect to make a lot of money, since the price of natural gas in Europe is 150% higher than it is in the U.S.
Cheniere (LNG) is a speculative play on liquified natural gas exports. The company has 3 natural gas receiving terminals and plans to build an export facility in 2015. So far, LNG has no earnings, and has a small $650 million market cap. The stock is up 154% since last year and is up 47% year to date. Cramer cautioned that LNG is a wild trader; investors are down 21% off its recent secondary offering.
CEO Charif Souki thinks the adoption of natural gas is inevitable, given its massive supply and low cost. "Natural gas doesn't need a passport," and can be transported around the country in the same liquified form as it is when exported. While the company's export terminal is expected to be quite costly, the CEO expects to cover the expenses.
"This is a call option on the export of natural gas," said Cramer. "For risk-takers, you heard the story."
Sometimes the only thing that is propelling stocks is dividend protection. Even stocks whose fundamentals are not terrific are being buoyed on the strength and protection of their yields. Lockheed Martin (LMT), the defense contractor which may suffer from cuts in government defense spending, has risen an astonishing 15% year to date thanks to its 3.7% dividend. Clorox (CLX) and Kimberly Clark (KMB) both missed their quarters, but have risen 7% and 6% respectively. Heinz (HNZ) rose 9% in spite of a downgrade; it yields 3.6%. Oil stocks have been hit, but those like Chevron (CVX), which is up 9% and has a strong dividend, are winning, and non-yielders like Hess (HES) have been falling. The woes in the banking and tech sectors are not helped by their lack of dividends. REITs have been secure plays along with utilities; First Energy has risen 18% thanks to its 5% yield, even though the company is considered by many to be second-rate.
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