This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cramer's 'Mad Money' Recap: Next Week's Game Plan (Final)

Stocks in this article: AXL FCX AMT TRMB GRMN

Production Ramps Up

In an exclusive "Executive Decision" segment, Cramer spoke with Andrew Gould, chairman of Schlumberger (SLB), the oil service giant that just posted great earnings and a 10% dividend boost.

When asked about the overall state of the oil industry, Gould said that 2011 was a great year for exploration successes and when it comes to 2012, this will be the year that production at those new discoveries begins to ramp up. He said that in the U.S., the diversion of oil and natural gas prices has never been greater, but that does not apply to the rest of the world.

In what he described as a turn in fortune form the last few years, Gould explained that successes in finding new oil, especially offshore all over the world, has been staggering. "Those finds will come," he continued.

When asked about hydraulic fracturing here in the U.S., Gould painted an upbeat picture, saying that the theme is "do more with less." He said that new technologies will allow for less fracturing with cleaner fluids and less water, resulting in the same outputs with far less environmental concerns. We'll only be fracturing the "sweet spots," he continued.

Cramer remained bullish on Schlumberger, saying that the price of oil is poised to remain high for the foreseeable future and increased drilling activity worldwide is great news for the company.

Diversification Key

For the last of his "Tune Up" auto stocks, Cramer highlighted American Axel & Manufacturing (AXL), a speculative $11 stock that Cramer said was cheap and moving in the right direction.

American Axel manufactures drive train parts and systems for cars and light trucks and has a $1.1 billion backlog of business. Cramer said this gives the company not only great visibility but t also has only 4% of its sales vulnerable to the ailing European markets. The stock is up 14% for the year, but Cramer noted that shares are still down 23.7% over the past 12 months and off 63% from its 2007 highs.

With a multiple of 5.6 times earnings and a 16% growth rate, Cramer said there's no doubt that American Axel is a cheap stock, but why is it a speculative stock? Lack of diversification.

Cramer explained that nearly 70% of American Axel's sales come from a single customer, General Motors (GM). In addition, 81% of sales come from a single segment of the auto market, light trucks.

On the plus side however, the company has a plan to diversify its business both away from GM and away from light trucks. The plan calls for GM sales to account for only 60% of sales this year and head lower from there.

Cramer also noted that American Axel is also diversifying geographically as well, expanding into high-growth areas like China and Thailand. Put that all together, and Cramer said he sees a cheap stock with a lot of potential as auto sales in the U.S. continue to expand.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs