Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday June 26.
Is Natural Gas Bottoming? Ultra Petroleum (NYSE:UPL)
Could natural gas finally be bottoming? Technical analyst Tim Collins noticed that the chart shows a higher low and a large "W" formation, which is a classic technical sign of an impending rally. Natural gas touched its ceiling of $2.75, and breaking through this level could mean a rally up to $3 by August. If Ultra Petroleum (UPL) moves up just ten cents higher, it could break the key level of $21.50 and rally dramatically. While Cramer thinks UPL is a good company, and agrees that it is possible natural gas has bottomed, he warned that UPL is a pure play on natural gas, and is therefore more risky than an oil and gas play.
It was a brighter day for stocks on the news that News Corporation (NWS) is splitting into two companies; the stock rallied $1.65 on Tuesday and could move up higher, since the formal announcement has not been made yet, but is expected to be released on Thursday. NWS is splitting its rapidly growing entertainment and media segment from its slower-growth print business. Cramer predicts the stock could go to $25-28.
Cramer took a call:
LinkedIn (LNKD) is overvalued, but Cramer would not short the stock, because there are still many people who like it.
Jabil Circuit (JBL) is one of the world's leading providers of electronic services, and assembles consumer electronics, industrial networking equipment, medical devices and more. Companies save on manufacturing costs by using Jabil's services. There is talk that Apple (AAPL) is using JBL to make casings for its new iphone, but neither company is allowed to speak publicly about the rumored deal. The stock has fallen 8 points and is 30% off its high, because it has been regarded as a tech stock, when the company is currently making the transition into increasing its diversified manufacturing services. This segment is expected to represent 50% of the company by 2013 rather than the current 44%. While the quarter was merely in-line, the stock jumped 6% following earnings because if its bullish projections for 2013. CEO Tim Main explained that he knew that 2012 was going to have some rough spots during the diversification of its business. Main expects JBL to see a 10-15% growth rate during its following fiscal year, which starts in September. "Stay with Jabil down here," Cramer said.
When looking at two stocks, it is not always a question of which stock is better, but which stock is more appropriate for the individual investor. For those looking for a trade with a near-term catalyst, Cramer would consider buying FedEx (FDX) which is down after a rise following its earnings report; FDX trades at a multiple of 11 compared to UPS' (UPS) multiple of 14. FDX is involved in a dramatic cost-cutting and restructuring of the company, and during its Analysts Meeting in October, it is likely to discuss these changes. Cramer sees this meeting as a catalyst for the stock, and would sell it following the meeting. For a long-term investment, Cramer prefers UPS, which is better organized and more consistent. UPS is growing through acquisitions which will give it more exposure to Latin America and Asia and provide a road freight service, a service it had to outsource before. Both UPS and FDX are stocks that will deliver, depending on the reasons for buying.
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