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rate cut, it's time for investors to make some speculative mining plays, Jim Cramer told viewers on his "Mad Money" TV show Friday.
The half-point cut on Tuesday has raised the value of hard assets against paper money. Additionally, lower Fed rates lead to higher economic activity, which leads to more consumption of metals, Cramer said.
For a sexy speculative buy, Cramer recommended
( LMC). Although the company has had its ups and downs, Lundin now deserves "two thumbs up."
Lundin has major exposure to four metals: zinc, copper, nickel, and lead. After acquiring Tenke mining and Rio Narcea earlier this year, Lundin is bigger than ever. By purchasing Rio Narcea and Tenke, Lundin has increased its nickel and cobalt exposure, Cramer said.
Asian consumption of zinc "continues unabated," driving up zinc's price by3% this week, Cramer said. Lundin has captured this price rise, so its earnings should increase. With China and India importing record amounts of zinc and nickel, respectively, the increase in demand should continue. Additionally, Lundin has seen some insider activity. Lundin is a great buy at $12 per share, Cramer said.
Cramer's second metal pick,
, looks like "a solid blue chip." An "under-the-radar IPO" in August, Horsehead is almost certainly undervalued, Cramer said.
In December 2003, Sun Capital bought Horsehead, which was in bankruptcy, breathing new life into the company by installing new management. This was a rare case of a private-equity firm fixing an ailing business, Cramer said. "The only thing keeping ZINC down is that no one knows it," Cramer assured viewers.
"If we had do-overs in the stock market, and Horsehead had debuted this month instead of August, it would be at 30," Cramer assured viewers. He urged investors to use caution and recognize they have missed out. If Horsehead reaches 23, "walk away," Cramer said.
For his "Game Plan" segment, Cramer instructed investors to look at an upcoming chemical conference at Credit Suisse, where
( NCX) and
Air Products and Chemicals
are expected to show new potential.
At the UBS Life Science Conference,
should "strut its considerable stuff." Cramer expects the company to become a big player in the women's health business.
Cramer finished the segment by addressing "bearish concerns" about the market. High oil prices are not a problem because "oil and oil stocks have been the market leader this whole run." Oil prices have helped demand in the agriculture, aerospace, machinery and sectors. Without expensive oil, these stocks would be going nowhere, Cramer said.
Cramer recommended that investors use high oil prices to their advantage by investing in companies like
, which he owns for his
Action Alerts PLUS,
Many more rate cuts lie ahead, meaning investors should see few steep declines in the market, Cramer said. Companies like
Research In Motion
( RIMM) and
"are producing more cash than they know what to do with."
To alleviate concerns that a weak dollar would hurt American stocks, Cramer pointed out that strong European and Canadian companies will be buying companies with their newly expensive currencies. "What's bearish to the bears is actually bullish to this guy," Cramer said.
During "Mad Mail," a writer accused Cramer of painting his failures as successes, pointing out apparent inconsistencies and unwarranted optimism in Cramer's predictions on
, which he owns for his charitable trust.
Cramer replied, "If there's anyone who beats himself up more on TV than I do, let me know." Cramer is hurt by losses as much as any investor, and never truly wavered on Goldman Sachs, he assured viewers.
Cramer was bullish on
Abercrombie & Fitch
Cramer was bearish on
American Capital Strategies
Aluminum Corp. of China
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At the time of publication, Cramer was long ConocoPhillips, Goldman Sachs, NYSE Euronext and Transocean.
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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