Mad Money Recap
Cramer's 'Mad Money' Recap: The Prius of New Tech
TheStreet.com Staff
06/17/08 - 07:47 PM EDT
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"Saving energy is job one at just about every company in America," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. On that point, he recommended little known Baldor Electric (BEZ) as another "new tech" company that might not be sexy, but is helping to solve the country's energy problems. Baldor manufactures energy-efficient electric motors that help companies reduce their energy consumption, said Cramer. It derives 63% of its revenues from its electric motor division, 27% from energy transmission equipment and 10% from generators. According to Cramer, Baldor's "Super-E" line of motors is the key to the company's success. For example, he noted, a 30-horsepower Super-E motor running continuously would save a whopping $1200 a year in energy costs. And while the Super-E typically costs 20% more than traditional motors, Cramer said, "It's just like a Toyota Prius." Cramer said Baldor also has the 2007 Energy Bill in its favor. The bill, which calls for more energy efficient motors to be in use by 2010, plays right into Baldor's business model. The company has favorable earnings forecasts extending out as far as 2011, he said. Baldor is not well loved on Wall Street with 16% of the company's float sold short. But Cramer said the huge negativity surrounding the stock should be seen as a positive. He said that while much of the short interest is due to the company's large debt position, management has laid out plans to reduce the company's debt to less than 30% of capitalization from 62%.
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An Attractive Dividend-Growth Play
After being stumped earlier in the week by a caller asking about Linn Energy (LINE), Cramer did the homework and considers the company a buy. He credited his viewers with giving him many great stock ideas over the years.
Listen to the Ax
"Knowing how and why stocks move is vital knowledge for anyone who wants to be a good investor," Cramer told viewers. That's why he offered an inside look into why Research In Motion (RIMM) went up seven points in Monday's market, lifting the entire Nasdaq along with it. Cramer credited Rod Sanderson, an analyst at American Technology Research, for yesterday's rally in RIMM. He called Sanderson "the ax," a Wall Street term for the analyst with "the edge" on a stock. Sanderson has been alone in recommending RIMM, said Cramer, giving him the inside edge and credibility on where the stock might be headed. When Sanderson raised his guidance yesterday from $4.25 to $4.60 a share, the move turned heads, said Cramer. "The rest of the Street now must bow to Sanderson's wisdom," he said. When "the ax" raises guidance and has the highest estimates out there, it causes a ripple effect, with multiple firms immediately following suit, playing catch-up, he said, noting that is exactly what happened with RIMM Monday. "The shorts cannot put out this fire," said Cramer, who gave Sanderson a standing ovation for a job well done.Mad Mail
In this segment, Cramer told a viewer that while he would not buyer either Focus Media (FMCN) or McDonald's (MCD) ahead of the 2008 Olympic games, he would buy Yum Brands (YUM) for their continued successes in China. He told a second viewer that while there are no deep water wildcat drillers, he likes Devon (DVN) as a play on deep water drilling for oil.Sudden Death
Cramer was bullish on Martha Stewart Living (MSO). He was bearish on Ivanhoe Energy (IVAN).