Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday March 13.
Cullen/Frost Bankers (NYSE:CFR), JPM (NYSE:JPM), Royal Bank of Scotland (NYSE:RBS), iShares MSCI Europe Financials Sector Index (NASDAQ:EUFN)
Banks have gone from laggards to leaders, as many rose after passing the stress test. Cramer took a look at the charts of several banks to show that not all financials are created equal, even as there is upside for the sector as a whole.
Cullen/Frost Bankers (CFR) has been trading sideways for the last few months at a range of $55-57, but if it breaks through the $57 ceiling, its next stop is the mid-60s. Volume has been sufficiently strong to show that the rally has fuel behind it. JPMorgan (JPM) shows the stock has been working its way higher from a bullish "W" formation. On news of its dividend hike, the stock broke through the ceiling of resistance which had kept it down for ages. The stock may have some correction, since it has risen 7%, but Cramer thinks it is more likely that JPM is one "wholesale jail break to the upside."
European banks, not surprisingly, are performing poorly. The iShares MSCI Europe Financials Sector Index ETF (EUFN) should face stiff resistance at $18, and while it has a floor of $17.50, the floor is weak. If this floor breaks, it could fall to $17 or even to $15. Royal Bank of Scotland (RBS) is up 25% for the year, but could give back its gains. The stock has formed a rounded top but is falling through its floor of support. Cramer thinks there is more pain ahead for RBS.
Microsoft (NASDAQ:MSFT), Panera Bread (NASDAQ:PNRA), Wells Fargo (NYSE:WFC), Beam (NYSE:BEAM), CME Group (NASDAQ:CME), Diageo (NYSE:DEO), Apple (NASDAQ:AAPL)
With the Dow up 218, it seems that the growth in the markets is continuing, and stocks are no longer hostage to Washington or macro news. JPMorgan announced its aggressive dividend increase and its buyback even prior to the results from the Fed's stress test for banks, which the financial sector passed with flying colors. Stocks that should continue their march upward include Apple (AAPL), Panera (PNRA), Wells Fargo (WFC) and Microsoft (MSFT), since these are high growth stocks that are trading at relatively low multiples.
Cramer took some calls:
CME Group (CME) is too hard to call. Cramer recommends buying banks that passed the stress test instead.
CEO Interview: Andrew Littlefair, Clean Energy Fuels (NASDAQ:CLNE)
With natural gas reaching new lows, there is reason to hope that the fuel might replace diesel as a cheaper, cleaner alternative fuel source. Clean Energy Fuels (CLNE), which builds natural gas filling stations, has risen 65% in just four months. However, the natural gas sector saw a setback on Tuesday when a bill that would give tax incentives for companies that make the switch to natural gas engines for their truck fleets was defeated narrowly. The bill needed 60 votes, but only 51 voted in favor. CEO Andrew Littlefair thinks part of this might have been due to a misunderstanding; the bill was not a stimulus and "would not cost the taxpayer one penny," but would provide tax benefits. However, Littlefair doesn't think a push from the government is essential for the spreading adoption of natural gas, but believes the private sector will get the job done. CLNE saw a 38% increase in its growth in 2011 and expects even more growth in 2012. When asked if enough filling stations can become available to make natural gas a viable option, Littlefair replied that there doesn't need to be as many as 1,000 filling stations to make it simple to use natural gas, and the company is investing in building 150 new stations.
Cramer would buy CLNE on its decline following the defeat of that natural gas bill, because he feels the stock is headed back up.
CEO Interview: Jim Hackett, Anadarko Petroleum (NYSE:APC)
Anadarko Petroleum (APC) is one of the highest quality explorers and producers of oil and gas, but the stock got slammed following an investors meeting on the perception of lower than expected production growth of 3.5%. One reason production is not going to rise aggressively in the near future is that APC is cutting back on its natural gas drilling and is devoting 90% of its capital expenditures for oil drilling; "APC is getting punished for doing the right thing."
Jim Hackett said the decline was caused by a small group of shareholders who expected more aggressive growth near-term; "We are very confident," he said, that the company is making the right move into more oil. The company has significant international assets, both onshore and offshore, and has strong cash flow. Cramer says he has never seen a time when APC has had better prospects going forward.
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