Jim Cramer's Mad Money, 12/7/07: Don't Nix NYX

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday December 7. Click on a stock ticker for more analysis:

The Fuel is Greener: Deere (DE), Monsanto (MON), Bunge (BG), Mosaic (MOS), Agrium (AGU), Potash (POT)

When looking at the agriculture bull market, Cramer urged investors to think energy and not food. As oil prices rise, the pressure to develop alternative fuels from soybeans and corn will increase. This has been good news for farming stocks such as Deere, Bunge and Monsanto and especially fertilizer companies, Agrium, Potash and Mosaic. "All of these gains have been driven by demand," Cramer said and sees years of upside in this sector. However, since many agriculture stocks have already increased substantially, Cramer would wait for a decline before buying many of them.

Still Time for NYSE Euronext (NYX)

While NYX has been the worst performing stock Cramer has seen in 26 years in the business, he would stay with it. His thesis for owning the stock is unchanged and the only reason NYX went down is because "it was just going down…. Even though you hate owning it, nothing fundamental has changed for the company underneath it." In fact, NYX keeps beating estimates, its fundamentals are better than they were at the beginning of the year, and Cramer thinks this bear raid on NYX can't last forever.

Sitting on the Fed Fence: Kroger (KR), Costco (COST)

Cramer advised a wait and see strategy concerning the Fed meeting on Tuesday. A quarter point cut in rates could lead to recession fears and may bring some stocks down. On the other hand, a half a point cut could be a buying opportunity for banks tech and industrials. If it weren’t for the meeting, Cramer would suggest buying Costco and Kroger ahead of their earnings reports, but now he recommends waiting before making a move.

Meet the Mutual Fund Manager: Ron Muhlenkamp of Muhlenkamp (MUHLX) with stocks: Altria (MO), Devon Energy (DVN), Cemex (CX)

Cramer said investing in a mutual fund is really an investment in the fund’s manager, and invited Ron Muhlenkamp to discuss his strategy of finding good companies at low prices, particularly names others don’t recognize yet or like. He discussed MO, one of the fund’s holdings and said there is room to grow for DVN and CX.

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Comments

[Brian Powers]

There is a simple reason for the problem with NYX stock: the company is hard to value.

First, there was Arca and then Euronext, two big acquisitions that needed to be integrated. It is hard to estimate forward earnings with these variables. Then, you have speculation that NYSE could buy NYMEX, or ICE. Again, it is hard to forecast that kind of uncertainty.

Now, investors have the loss this week of the NYSE CEO and CFO to Merrill Lynch.

When you look at all of these variables, you see a company that, for many, is hard to value (especially over the short term that seems so in vogue). Nevertheless, the company has grown revenues and earnings by about 50% over the trailing twelve month period.

The best opportunities often arise when companies are hard to value.