Oil and Gas Play
In a second "Executive Decision" segment, Cramer spoke with Kelcy Warren, chairman and CEO of Energy Transfer Partners (ETP), 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.
Lightning RoundCramer was bullish on Chesapeake Energy (CHK), Booz Allen Hamilton (BAH) and Kinder Morgan Energy Partners (KMP). He was bearish on Imperial Sugar Co (IPSU), Micron Technology (MU), Crestwood Midstream Partners (CMLP) and VeriFone (PAY).
Sensible MergerIn his "No Huddle Offense" segment, Cramer said that everyone knows that the lumber, packaging and paper business is awful right now. So what does International Paper (IP) see in Temple-Inland (TIN) 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. To contact the writer of this article, click here: Scott Rutt. To follow the writer on Twitter, go to http://twitter.com/scottrutt. To submit a news tip, send an email to: firstname.lastname@example.org. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here. For more of Cramer's insights during the Lightning Round, click here.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV