Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday October 30.
It may seem incredible, but the charts are saying that coal could rebound. Technician Dan Fitzpatrick notes that the Dow Jones Coal Index is reversing and breaking out to the upside. The weekly chart of the Index shows that it was unable to break out of the 40 week moving average, and sellers were more aggressive than buyers. After that, the index was building a base, and it could break out over the 200 day moving average. Fitzpatrick recommends playing coal with Peabody (BTU) or Alpha Natural Resources (ANR).
For a while, BTU’s daily chart had been unable to stay above the 50 day moving average, until the stock flatlined and began closing at higher lows and building a base. Now the 50 day moving average has become a floor of support, and volumes show that buyers are taking control.
Cramer thinks that, with China possibly coming back, the decline of nuclear power, higher natural gas prices and a possible Romney victory, coal could be a buy. However, if President Obama is re-elected, the FDA could damage coal companies. Cramer thinks whether to buy or stay away from coal will be determined by who wins the election.
News Corporation (NWS)
News Corp is creating value for shareholders by breaking up the company; given its multiple divisions including FoxNews, a satellite TV division, film and television, this seems like a great move. Publishing accounts for 27% of revenues, and print is a laggard division, which it is spinning off. The rest of the company should grow at a faster pace once the publishing division is on its own. Although the company disappointed in its recent quarter on lower operating income and a substantial impairment charge, commentary on the conference call and News Corp’s strong balance sheet give reason for hope. Once the spinoff occurs, News Corp could shoot 16.6% higher
Investors are getting wise to the upturn in housing-related stocks, and it is increasingly hard to find undiscovered ways to play the turnaround. The Restoration Hardware (expected ticker (RH)) IPO comes at the perfect time, now that many on the East Coast might have to replace items damaged from hurricane Sandy. The company focuses on luxury home furniture, and has aggressive growth. While the company was hit hard during the recession, management doubled down on high-end furniture and replaced non-productive stores with galleries. The company saw a 27.8% rise in same store sales, and trades to a premium to competitors like Williams Sonoma (WSM), but it deserves to, since it has the highest growth rate in the group. Cramer would consider getting into the IPO in the mid 20s.
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