Baldor is Beautiful - Cramer's Mad Money (6/17/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program,Tuesday June 17.

Baldor Electric (BEZ)

Cramer’s most recent “new tech” pick is Baldor Electric, which makes energy-efficient electric motors, with the “Super E” line of motors as its outstanding product. The Super E, running continuously, could save up to $1,200 a year, which more than makes up for its higher cost; “It’s just like a Toyota Prius,” Cramer said. The 2007 Energy Bill requiring fuel efficient motors may increase Baldor’s sales by 10%. The stock is cheap, trading at 12.9% earnings with a growth rate at 13.7% and the company has strong overseas growth. The one strike against Baldor is that 16% of the company’s float is sold short, but Cramer would use this to the company’s advantage, since the company’s debt, which is the reason for the number of shorts, is most likely going to shrink from 62% of capitalization to 30%.

Get in LINE: Linn Energy (LINE)

When Cramer initially commented on Linn, he thought it was simply a good dividend play. On further investigation, Linn is the ideal turnaround story; Linn is trimming excess fat in the form of non-core assets, and is using its more useful acquisitions to increase drilling.The company currently has 1.7 trillion feet of proven natural gas reserves. The company offers a generous 10.6% dividend and has an aggressive buyback program. Cramer would get in LINE before Wall Street finds out about Linn’s story.

Sanderson, the Axe: Research in Motion (RIMM)

Rod Sanderson of American Technology Research, is Research in Motion’s axe, a Street term used for an analyst who has an “edge” on a particular stock. When he raised guidance from $4.25 to $4.60 a share and upped the price target to $205, even RIMM bulls were surprised. This move created a rally in the stock which brought up the Nasdaq. "The shorts cannot put out this fire," said Cramer.

Mad Mail: Focus Media (FMCN), McDonald’s (MCD), Yum Brands (YUM), Devon (DVN)

When a viewer asked about plays on the Olympics in China, Cramer rejected Focus Media, since he is bearish on Chinese stocks, and chose Yum, for its Chinese expansion, over McDonald’s. Cramer told another viewer that while there are no wildcat deep-sea drillers, Devon is the closest.

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Comments

[redbaron]

BEZ is also an energy conservation play using their Drives Div., as many electric motors can be run slower using these drives, without impacting performance. A reduction in speed of 1/2, for example, reduces electrical consumption by 7/8's (that's right, only 1/8 the electricity to run at 1/2 speed). Some electric motors in any manufacturing facility are running continuously at high speed, and could be programed to run slower at certain times to save large amounts of electricity. Baldor makes the equipment that can be used to make this happen.