The Windex Will Clean Up - Cramer's Mad Money (7/15/08)

by: Joan Wickham

Stocks discussed in the in-depth session of Jim Cramer's Mad Money TV program, Tuesday, July 15.

 "I think Thursday will be a landmark day for wind power," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. At a cost of only 4 cents per kilowatt, Cramer said wind power is the cheapest form of renewable energy. He said the entire wind power industry could get a boost on Thursday when the Texas Public Utility Commission makes an important ruling that will significantly boost wind power in the state.  Dockett #33672 will be remembered.  Cramer said the proposal would create eight renewable energy zones in Texas, providing much needed infrastructure to connect remotely located wind farms to the existing power grid. Texas will be the windmill king.  The decision will likely set the precedent for other states to get behind wind power.   

 The Wind-ex - Trinity Industries (NYSE:TRN), Thomas & Betts (TNB), Owens Corning (NYSE:OC), Clipper Windpower (OTC:CRPWF), Kaydon Corp (KDEN), Broadwind Energy (BWND), Woodward Governor (NASDAQ:WGOV), MasTec (NYSE:MTZ), Vestas Wind Systems (OTCPK:VWDRY), Otter Tail (NASDAQ:OTTR)

 Cramer said there are only a handful of true wind plays.  He revisited his index of 10 wind power stocks levered to the growth of wind power. Since its creation, the "Wind-ex" is down 11.8% like the overall markets. But Cramer said after Thursday's expected ruling, the wind story will get better than ever.

The Mad Money Wind-ex includes Trinity Industries, a stock which Jim owns for his charitable trust, which is down 19.7%; Thomas & Betts, also down 19%; Owens Corning, down 20%; Clipper Windpower, down 22%; Kaydon Corp, down 15.8%; Broadwind Energy, down 18%; Woodward Governor, down 11%; MasTec, down 1.6%; Vestas Wind Systems down 1.9%; and Otter Tail, the only one in the group with a gain of 15.8%. Cramer said the poor performance of the Wind-ex stocks has nothing to do with the wind power business, but rather with the industrial components of all of the companies. He reminded viewers that as wind power accounts for larger portions of their earnings, the other divisions will account for less.   In the future, Cramer says there will be "a chicken in every pot and a windmill in every backyard."  With oil down today, Cramer says people are "selling these stocks like there is no tomorrow.  You need to buy these stocks when you can."

 Wind-ex List Expanded - Quanta Services (NYSE:PWR)

 While most stocks levered to wind were getting hit again today, Cramer said he's still a buyer of Quanta Services (PWR), a stock which he's adding to the Mad Money Wind-Ex. Quanta, a stock owned by Jim's charitable trust, is up 6.3% since it was recommended on Nov. 15, 2007 at $27.28.  He said that Quanta, which builds and maintains energy infrastructure, is poised to take advantage of the coming boom in wind power.  According to Cramer, the U.S. will invest $1.5 trillion on energy infrastructure between now and 2030, and Quanta will be a beneficiary. The proposed initiative currently in front of the Texas Utility Commission alone could provide for $3 billion to $9 billion in new infrastructure investments. Cramer said electricity, which accounts for only 60% of Quanta's business, is only part of its operations. He said that 17% of the company's revenue comes from natural gas services and 17% comes from telecom and cable services, which is in the midst of a major upgrade cycle.  Quanta, which currently has $5.2 billion of work in its backlog, but only a $5 billion marketcap. Cramer said whenever a company's backlog meets or exceeds its total marketcap, it's worth a look. He said he'd be a buyer under $29 a share.

 No Naked Shorts for Fannie and Freddie - Fannie Mae (FNM), Freddie Mac (FRE)

 "Today we heard something good from the SEC but also something misguided," Cramer told viewers.  He noted earlier today Chris Cox, chairman of the Securities and Exchange Commission (SEC), said he's banning naked shorting, the practice of shorting a stock without first borrowing shares from a broker, for shares of Freddie Mac (FRE) and Fannie Mae (FNM). Cramer said the problem with Cox's statement is that naked shorting is already illegal. The SEC just doesn't enforce their own rules. Cramer, a long time opponent of hedge funds pummeling certain stocks through excessive shorting, said the agency needs to stop misleading the public and instead start enforcing the existing rules.

Cramer said the SEC has under regulated and failed to prosecute their own laws. He urged Cox and others at the SEC to start taking action to protect companies and small investors.

 A Bear Hug for Eaton (NYSE:ETN)

 Shares of Eaton, a stock he's championed in recent weeks, got pounded today after it lowered its annual guidance by 20 cents. He talked with Sandy Cutler, Eaton's chairman, president and CEO, to find out what happened. Cutler defended Eaton's performance, saying it delivered record revenues and profits in the recent quarter. Cutler said he lowered the company's guidance in recognition of a potential global economic slowdown.

Cutler told Cramer that Tuesday's stock drop was an overreaction by a jumpy market, and in fact the company is still projecting it will grow earnings next year.  He said he still sees overall strength in Eaton's global electrical and hydraulics business. In his opinion, it was prudent to mention the slowing growth in Europe and elsewhere.  

 Cramer said he'd be a buyer of Eaton on days like this. "This is a great American company that's here to stay," he said.  Cramer reminded viewers that his "new-tech" stocks are performing 5.3% better than the overall S&P500. And he said he's standing behind Eaton and agreed the declines today were just an over-reaction.

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