Big oil companies Statoil and BP plc (BP) have been reporting they don't have enough oil and need to drill. Cramer predicts oil will go to $125 and he would play the shortage by investing in FMC Technologies, which recently landed a contract to drill in Paz Floor, a gigantic oilfield off of Angola. FMC has 40% of the market on sub sea trees, devices used for underwater drilling, and Cramer expects many more contracts for FTI. He adds the company has an aggressive buyback and is trading at 22x earnings with a 20% growth rate. Once it spins off its legacy business, FTI will be a pure play and is a buy, said Cramer.
Eric Dinallo discussed concerns over the investigations of MBIA and other insurers. First, Dinallo said his company was "looking out for the little guy" and expressed approval of MBIA's dividend cut. He is currently encouraging Berkshire Hathaway to get involved in bond insurance.
UBS and Goldman Sachs are locking horns over the fate of Salesforce; Goldman downgraded the stock and UBS upgraded it on the same day. "What's amazing about these differing opinions," Cramer noted, "is how much the analysts agree on." Both analysts agreed CRM is the best in the software business with superb management and stable revenues, but Goldman feels the stock, which trades at 170 times 2008 estimates is too expensive. Cramer agrees with the Goldman analyst and says while CRM may see 10 points of upside, there may be as much as 30 points to the downside. The moral of the story; "even great companies can be too expensive," said Cramer.
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