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Cramer's 'Mad Money' Recap: BASF's Good Chemistry

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

"Tonight we're talking predators and prey in the mini-chemicals bull market," Jim Cramer told viewers of his "Mad Money" TV show Thursday.

The chemical predator here, he said, is BASF (BF Quote), which is the biggest chemical company in the world.

The Ludwigshafen, Germany-based company also happens to be the next stock on Cramer's weeklong "European Vacation" series. "I like BASF because it has nothing to do with the United States," he said. "It has a lot of rest of world exposure."

Chemical companies have become great takeover targets, but don't expect BASF to get a bid, Cramer told viewers.

Like takeover candidates, stocks that belong to good businesses, with good earnings, can move up, too. "That's what you're buying with BASF."

Cramer said he wouldn't be surprised to see BASF, now at $136, hit $150. "As long as chemicals remain in favor, BASF will not be denied," he said.

Beyond the fact that the industry is "smoking," BASF is becoming less cyclical, which means its earnings are becoming more consistent, Cramer said. "It has earnings that allow you to sleep at night."

Plus, though it is a predator in the chemicals industry, BASF also has, on a smaller scale, its hands in two more bull markets: agriculture, and oil and gas, he said.

BASF has a subsidiary that's involved in oil and gas. This is "crucial," because BASF should be getting killed because of high oil and gas prices. But in this case it owns its own supplier.

Prey Tell

The prey is Canadian company Nova Chemicals (NCX Quote).

Nova is the next small chemicals company to be taken out in a big way, he said. More importantly, "brilliant" chemicals analyst Frank Mitsch believes the same thing.

Len Blavatnik, the founder and chairman of Access Industries, is the predator and is building a global chemical company, Cramer explained.

Blavatnik is hungry to grow Access through acquisitions, and the fact that he is continuously being outbid has only strengthened his desire to buy, Cramer said.

"We never speculate on takeovers unless the fundamentals are good, because if they are no good, you're going to get your head handed to you," Cramer continued. "Nova has great fundamentals."

Looking at what comparative companies have been sold at, he estimated that Nova could reach an average price of $56 if it were to get taken out.

"Does it get any better than this?" Cramer asked. "If you want to try to make some easy and big money with chemicals, go for the prey."

Sell Block

During his "Sell Block" segment, Cramer pointed out that over the course of this year, market players have had some big gains.

If people have made big wins, they should take some profits and play with the house's money, he urged.

In last week's Sell Block, Cramer said he warned people against staying in Blackstone Group (BX Quote) and hopes people listened.

However, horseman Google (GOOG Quote), which Cramer recommended last week, missed its quarter and now the stock is down.

"This was a bad quarter from Google," he said. "Maybe I became a hog on Google."

Also, Cramer said he "screwed up" on his "Game Plan" last week. First of all, anyone who bought his recommended stocks Monday morning wasn't using the game plan correctly, Cramer said.

"Please don't buy the first trading day the week after I recommend a stock," he said. "You have to wait for weakness" -- or in some cases -- "take a pass." If a stock opens up strong, take a pass, Cramer stressed.

Second, in the case of Johnson Controls (JCI Quote), viewers should have set a limit, and if they were unable to purchase the stock at or below their price, they should have also taken a pass, he said.

"That's what you have to do," Cramer said. Don't get jumpy buying stocks.

Cramer said he blew it on Johnson Controls. The stock didn't blow away its quarter, Cramer said, but it's still an "anointed" stock and should start going up after this so-called disappointment.

"If anything, it should be on the Buy Block not the Sell Block," he said.

Meanwhile, the financials are in "Rumorville," Cramer continued. "Sell the banks and the brokers, even with Washington Mutual (WM Quote) reporting a good number."

Further, Goldman Sachs (GS Quote), which he owns for his charitable trust, Action Alerts PLUS, might not bottom until it hits $200, he warned.

If people can take the pain, they should stay in it. Otherwise they should sell it, Cramer said. Goldman Sachs closed at $211.69 Thursday.

Still Riding the Rails

James Young Union Pacific (UNP Quote) chairman and CEO joined Cramer on his show and said that in the last two to three years his company has started to see the overcapacity in the rail industry lighten up.

This, tied with the increased congestion on highways, has pushed UNP up, the CEO said.

Cramer said that at $125, Union Pacific, which he owns for his charitable trust, is not done going higher. It, along with the rest of the rails, particularly CSX (CSX Quote) has two thumbs up, he said.

To view Cramer's interview with Jim Young, please click here.

Lightning Round

Cramer was bullish on ConocoPhillips (COP Quote), Bolt Technology (BTJ Quote), LodgeNet Entertainment (LNET Quote), Millipore (MIL Quote), Altria (MO Quote) and Honeywell (HON Quote).

Cramer was bearish on Knight Capital (NITE Quote), Toll Brothers (TOL Quote), Lennar (LEN Quote) and K.B Home (KBH Quote).

For more of Cramer's insights during the Lightning Round, click here.

Want more Cramer? Check out Jim's rules and commandments for investing from his popular book by clicking here.