Oil and Gas Play
In a second "Executive Decision" segment, Cramer spoke with Kelcy Warren, chairman and CEO of
Energy Transfer Partners
(ETP - Get Report), an oil and gas pipeline master limited partnership with a juicy 7.9% dividend. Shares of Energy Transfer Partners are just off their 52-week lows after the company delivered a 31-cent-a-share earnings miss during its most recent quarter.
Warren explained that the earnings shortfall was due in part to what they called "basis," the cost differential of oil and gas in different parts of the country. He said with basis being extremely low, there's simply less money to be made moving oil from place to place. Warren also pinned the weakness on weak seasonality.
Warren was bullish however, on the company's propane business, which he said is also seasonal and driven by the economy. He said his company is committed to its propane business in part because of its low tax basis.
When asked about liquified natural gas, Warren explained that Energy Transfer Partners will be making liquified products a much bigger part of its business going forward. He said our country is gearing up to become an exporter of natural gas, and as that happens, his company will likely need to offer more equity to make it happen.
Finally, when asked whether Energy Transfer's dividend is likely to be cut, Warren said absolutely not. Warren said he's extremely disappointed that his company has not been able to raise distributions as of late, but they're certainly not at any risk of being cut.
Cramer said Energy Transfer Partners is a buy and investors should own it.
Cramer was bullish on
(CHK - Get Report)
Booz Allen Hamilton
(BAH - Get Report)
Kinder Morgan Energy Partners
He was bearish on
Imperial Sugar Co
(MU - Get Report)
Crestwood Midstream Partners
(CMLP - Get Report)
In his "No Huddle Offense" segment, Cramer said that everyone knows that the lumber, packaging and paper business is awful right now. So what does
that made it want to start a hostile takeover of the company?
In a word, Cramer said synergies. He said despite the fact that the paper business is awful, building products are downright dreadful and corrugated products will be in less demand as the economy ships less, International Paper is looking towards the long term, and sees a place where synergies can be attained and numbers can be boosted. Plus, said Cramer, it also sees a regulatory environment where the merger is likely to be approved.
So while the markets may be focused on the day to day, in the long run, Cramer said this paper merger makes perfect sense.
--Written by Scott Rutt in Washington, D.C.
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