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NEW YORK (
) -- "The biggest surprise of 2012 could be seeing the financials rally," Jim Cramer told his
TV show viewers Monday.
He explained that when the financials rally, and the tech stocks rally, then the sky's the limit for the rest of the market.
Cramer said that both the tech stocks and the financials have been laggards though out the back half of 2011, but now in 2012 both groups seem to be leading the markets higher once again. In the case of the tech stocks, expectations have set the bar so low and it's almost certain the group will be able to rally off their lows, he said.
Just today in fact, there were two upgrades of semiconductor companies, he said. That means stocks like
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS, can both be bought, along with the equipment makers
Today also saw an earnings bump for Action Alerts PLUS name
. Cramer said the iPhone 4S is proving to be a huge success, causing
rival Android platform to lose share and making investors hardly notice new phones from
Cramer said with so much going on in tech, and tech making up such a larger part of the
, it's easy to see why the markets are looking up in the absence of news from Europe. Also on the bright side, the financials, another sizable chunk of the S&P.
Cramer said he still likes
, another Action Alerts PLUS holding, along with
and a handful of regional banks.
Oil Service Play
Cramer said that one of the biggest mantras for 2012 will be "in oil we trust," as the price of crude oil continues to surge, with just about nothing to get in its way. That's why he highlighted the little known oil service company
Key Energy Services
as a great way to play the continued oil drilling boom here in the U.S.
Cramer explained that Key is an on-shore well services company, along the lines of
, only Key is honed in on the hottest area of U.S. drilling, hydraulic fracturing.
The horizontal wells used in fracturing require more maintenance and service than traditional vertical wells, explained Cramer, and Key has special techniques that allow repairs to be done even when the well is still operating, minimizing downtime. The company is also a large player in the wastewater treatment and disposal business with a fleet of tanker trucks and 65 salt water disposal wells.
Cramer said he also likes the company's international exposure, which accounts for 20% of sales but is expected to grow between 40% and 50% in 2012. Trading at just 9.7 times forward earnings with a 12% long-term growth rate, Cramer said that Key Energy Services has a great PEG ratio, which makes it more attractive than its larger peers.
Unlikely Housing Theme
What's another unlikely theme for 2012? Cramer said it just might be a turn in housing. He said the evidence of a bottom in housing is beginning to materialize, from stronger home sales numbers to upside surprises from home builders to an improving employment picture. But the way to play this recovery in housing is not with the homebuilders, said Cramer, or even with the materials stocks, as they've already run up big. Instead, Cramer suggested
, an Action Alerts PLUS holding.
Cramer explained that Weyerhaeuser is the second largest owner of timberland in our country, with an astounding 6.15 million acres. The company mainly makes wood building products, but also manufactures paper and packaging materials as well as having a small home building division.
Cramer said that Weyerhaeuser has great management that has been streamlining operations, selling non-key assets and improving costs across the board. This makes the company far less cyclical and dependent on a strong economy as it has been in the past.
Weyerhaeuser recently converted itself into a real estate investment trust, or REIT, which has greatly improved costs as the company now pays over 90% of its earnings directly to shareholders. Weyerhaeuser also has exposure to Asia and China as well, another plus.
Cramer said that investors can't wait for a turn in the U.S. housing market in order to buy Weyerhaeuser, emphasizing the time is now. He said the company's 3.2% dividend yield will pay them to wait for the housing market to improve, at with time Weyerhaeuser will be printing money hand over fist.
Sandridge's Trust Share Opportunity
In his "Know Your IPO" segment, Cramer circled back to
, a stock he featured last week on "Mad Money." After interviewing the CEO and telling viewers how great Sandridge was, Cramer said he neglected to mention the opportunity that will be created when Sandridge offers its Mississippian Trust II shares, which will trade under the ticker "SDR."
Cramer explained that Sandridge has done deals like this twice before and both have been big winners. The first, the
Sandridge Mississippian Trust I
, launched last April and rose 15% on its first day and 23% thereafter. The fund still yields 10%, making it highly attractive. The second,
Sandridge Permian Trust
, also outperformed the markets and currently yields 11.1%.
Cramer said that Sandridge has a history of under promising and over-delivering, especially given that the company benefits as shares of these trusts do well. In the case of Mississippian Trust I, Sandridge added an extra drilling rig to accelerate drilling.
Cramer noted that since Sandridge needs the money it generates from these trust offerings, the company can't demand an artificially high price for the IPO, something that cannot be said for all IPOs.
With so many oil and gas trusts moving up and sending yields lower, Cramer said these from Sandridge are some of the few he's still able to get excited about.
Cramer was bullish on
Kinder Morgan Energy Partners
Energy Transfer Partners
Cramer was bearish on
Caveat on Auto Stocks
In his "No Huddle Offense" segment, Cramer opined on the auto stocks, and the myriad of reasons why investors shouldn't own them.
Cramer said perhaps the only thing that matters to the U.S. automakers is the number of cars being sold in the U.S. But with continued weakness in Europe, Cramer said those numbers could easily be offset. Then there's also China to contend with, a country that need drastic interest rate cuts to jump start its slowing economy.
Cramer said the U.S. automakers are also being squeezed on margins, as they've locked in prices for materials and can't take advantage of any continued weakness. There is some dividend protection with
, said Cramer, but too little to matter. Then there are the lingering issues of whether, and when, the government will sell its remaining shares in the auto stocks.
For all of these reasons, Cramer told viewers to steer clear of the auto stocks for the foreseeable future. THey may be cheap, he said, but they're not investable.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Broadcom, Apple, US Bancorp, Weyerhaeuser.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.