Gas but Not Least - Cramer's Mad Money (6/18/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday June 18.

Gassing Up: XTO Energy (XTO), Southwestern Energy (SWN), El Paso (EP), Ultra Petroleum (UPL), Apache (APA), Anadarko (APC), Chesapeake Energy (CHK)

One mystery on The Street is that big oil names like Exxon have made only paltry gains while oil has risen from $100 to $130 in a heartbeat. Oil companies either are not able to drill more oil or were hedged on the prediction oil would go lower and lost, explained Cramer. But natural gas names, such as XTO Energy, Southwestern Energy, El Paso Ultra Petroleum, Apache, Andarko and Chesapeake are winning as they ramp up production. Cramer noted an historical six to one ratio between oil and natural gas; with oil sitting at $136, natural gas should be at $23 rather than $13. Cramer notes Chesapeake CEO, Aubrey McClendon has bought back $34 million of the company’s shares since May 30th, and if he believes in natural gas, so should investors.

Twice Blessed: Mosaic (MOS), Agrium (AGU), Potash (POT)

Cramer briefly discussed “twice-blessed” fertilizer stocks which have made substantial gains on global food shortages and ethanol demands. Although Mosaic is up 1120%, Agrium is up 419%, and Potash is up 773% since his October 2005 recommendation, Cramer predicts continued highs in the stocks.

CEO Interview: Paul Varga, Brown-Forman (BFB)

While its competitors, Fortune and Constellation Brands have dropped so far this year, Brown-Forman had a gain of 7% until bearish analysts brought down the stock. Varga conceded it hasn’t been an easy year for Brown-Forman, but the company has been focusing on its stellar brands, such as Jack Daniels which people “ask for by name.” Varga is confident about overseas expansion; “but we’re at such small levels of market share that the upside is still very, very large.” Because of global growth potential, Cramer would buy best-of-breed Brown-Forman.

Mad Mail: Baldor Electric (BEZ), Costco (COST), Permian Basin Royalty Trust (PBT), Legacy Reserves (LGCY)

Cramer told one viewer that concern over housing is a greater threat to consumer confidence than inflation fears. A viewer praised Baldor Electric’s motors and Cramer reiterated his buy recommendation. Cramer agreed with a viewer who said Legacy Reserves may be a better choice than Mad Money Pick Permian Basin. Costco’s decision to sell 10% ethanol at its pumps should not affect earnings, said Cramer.

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Comments

[sharksm]

Cramer is a moron, only exceeded by those who swear by him. I have been Investing in energy since 1999 when oil was $12 bbl and nat. gas wass 1.72 mcf. I have and do still own CHK, COP,XOM, XTO. CVX, HK, numerous oil service & drillers and recently sold DVN which I had purchased at $7.00. Over those years I have heard Cramer scream buy, sell, buy sell, etc. ad nauseum. When a stock is at it's high, he yells, buy, buy, buy, and when it falls back he turns like a weathervane and yells sell. The normal ratio between oil & natural gas is 8-1 not 6-1, and natural gas will probably pull back into the $9-10 area, at which time Cramer with his clownlike appearance will, sweat,a wipe his brow and say take it off the table. He is an idiot and only exceeded by his fans. Since the cost of producing natural gas is less than $3.00 mcf, even $9.00 provides a nice margin. Also look at the drillers and service Companies, like PDC, HAL,RIG, NE, DO, PDS (which pays a 5% dividend), HERO, etc . I own them all.

[User 13449]

CREAMER SAID TO BUY PBR LESS THAN TWO WEEKS AGO AND NOW HE THINKS IT IS "TOO BIG"! SHOULD I SELL?

[khwender]

Sharksm, this is for you. Cramer is a trader and he does change his mind. He personally made 100 million for himself and many millions for his customers at his hedge fund. When was the last time you accumulated 100 million $ ?