Cramer's Mad Money - Inflated EGO (3/20/09)

Includes: AIG, BP, EGO, KHC, KO, MCD, RY, TD, WEC
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday March 20.

Inflated EGO: El Dorado (NYSE:EGO), McDonald's (NYSE:MCD), Coca-Cola (NYSE:KO), Heinz (HNZ), BP (NYSE:BP)

With reforms that will require printing more money, inflation fears are returning, but Cramer isn't too concerned. Inflation is a side-effect of the strategies to cure the badly deflated economy, but the main casualty will be the dollar. However, that isn't so bad for gold and companies with strong international exposure. Gold is the most typical hedge against inflation, and since Cramer's favorite, Agnico Eagle Mines,has already bounced, he would buy El Dorado instead. BP is already up too much, and Cramer would wait for oil to pull back before buying.

Companies like Heinz should have significant relief if the dollar falls, but the best weak dollar plays are McDonalds and Coca Cola. McDonald's gets 66% of its sales from abroad, is adding smoothies to its menu, has reported significant growth and offers a 3.7% dividend. Coca Cola gets 75% of its revenues from overseas and sales are up abroad. The company recently raised its dividend to 3.7%. Cramer would buy both of these great American companies whose products are a hit overseas.

Clean Coal? Not Yet: Wisconsin Energy (NYSE:WEC) CEO CEO Gale Klappa

First, the good news; the air is cleaner than it has been in the past 50 years thanks to scrubbers that remove sulfur dioxide from coal. The bad news: the technology to produce clean coal, free of carbon dioxide, istill has 10-12 years before it can be used. However, CEO Gale Klappa reports progress in the development of technology using chilled amonia to trap pollutants. Klappa was critical of President Obama's cap-and-trade plan to tax producers of "dirty" fuel, and said the legislation was far too draconian for not giving companies time to make the transition to cleaner fuel. Wisconsin and others in the industry will be forced to pass on expenses to the consumer, which may translate into price increases of 54%. While Cramer thinks Wisconsin Energy is "the most forward thinking energy company in this country," he is no longer confident about the ability to produce clean coal soon enough.

Mad Mail: Toronto Dominion Bank (NYSE:TD), Royal Bank of Canada (NYSE:RY)

Cramer thinks Canadian banks are better regulated and managed and will weather the crisis more successfully than American banks. He recommends TD and RY. "The only thing they screwed up was they bought American collaterized debt obligations."

a New Warren Commission: AIG (NYSE:AIG)

There are a lot of financial crimes to be investigated in the current climate, but Cramer doesn't think it is the job of Congress to be in charge. He recommends Obama set up a kind of Warren Comission with indictment power and the ability to make subpoenas. An independent body would ensure that these investigations are free of partisan politics. Cramer pointed to Congress' handling of AIG bonuses as proof that an outside party was needed.


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