Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Thursday May 1. Click on a stock ticker for more analysis.
Joy Global (JOYG) and Bucyrus (NASDAQ:BUCY)
Cramer continued his thesis that manufacturing is the new tech, and discussed Joy Global and Bucyrus, two mining and coal companies which are expected to benefit from the prediction that the coal market will double by 2030, thanks to overseas demand. Bucyrus has created remote-controlled machinery and flame-resistant conveyor rolls, and Joy has produced a JOY memory CUT technology which improves safety for coal miners. Bucyrus does 70% of its business overseas and JOY’s global reach is at 55%; both companies are fairly well-insulated from a domestic slowdown. Cramer prefers Joy as a more conservative play, since it is less cyclical, but he likes both stocks, although he would wait before buying because both have enjoyed substantial runs. Joy Global trades at 17.6 times earnings with a 17.5% long-term growth rate, and Bucyrus trades at 19 times earnings with a 31% growth rate.
CEO Interview, Richard Bond, Tyson Foods (NYSE:TSN)
Cramer invited Richard Bond onto Mad Money after the Tyson CEO made comments sharply critical of the government’s ethanol policy. Bond said he had told “the plain truth” on the conference call and lamented the fact no one in the government consulted the food industry about the policy or warned of its consequences. Bond says the ethanol policy is “inefficient because it raises the price on feed stocks to artificially high levels, which increases costs for other uses, such as food. It is inequitable because higher food costs disproportionately affect the people who can least afford it. Essentially, it's a regressive tax on the poor, and not only the poor in America. Ethanol mandates and subsidies along with tariffs on ethanol imports are causing a world food crisis.”
While he applauds efforts to reduce dependence on fossil fuels, Bond says such a radical ethanol policy is not the solution. While he admits that ethanol is not the only factor in food inflation, he believes it is a major contributor.
Since the tech sector (which Cramer refers to as “old tech”) seems focused on selling products rather than finding solutions, Cramer thinks these stocks are sells with the possible exception of Apple. Cramer now espouses the “new tech” sector, which includes manufacturing stocks such as Eaton, Parker Hannifin and Joy Global and other companies which are using technical innovation to tackle tough problems such as global warming and the world-wide food shortage. Even companies like ORCL and CRM that make products to improve efficiency in the workplace are stale, said Cramer. He says many people now feel that conserving fuel is more important the TTWO’s Grand Theft Auto game or MSFT’s newest toy. The sole exception to Cramer’s “sell tech” call might possibly be Apple, because of the new iPhone scheduled to be released this summer.
CEO Interview: John McMahon, Genesis Lease (GLS)
Cramer asked the CEO why this Cramer pick has declined a staggering 49%. McMahon said nothing has really changed, the company still has a diverse portfolio, a $750 million line of credit and leases fuel-efficient aircraft. McMahon blamed a general lack of understanding about what GLS does, which is to lease aircraft, and the company is not suffering from problems faced by airlines. Cramer says the stock has been down for too long and is no longer recommending it.
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