RealMoney Radio Recap: A Chevron Proposition

Cramer's guest hosts talk up probable effects of the election on big oil and big pharma.
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Americans need to "get out and vote because it counts," Gregg Greenberg and Farnoosh Torabi said on Jim Cramer's

"RealMoney" radio show Monday.

In a pre-Election Day special, Greenberg and Torabi, reporters at

TheStreet.com

, filled in as guest hosts for Cramer on his Monday show.

Although people might believe that their individual votes don't matter, they do, Greenberg said. As an incentive, he suggested canceling the Fourth of July as a national holiday and making Election Day one, so people wouldn't have to hustle in between work to vote -- and more importantly -- people wouldn't have an excuse not to vote.

However, Torabi, quoting former U.S. president Calvin Coolidge, pointed out how "the business of America is business" and vetoed Greenberg's suggestion.

Switching the topic to oil, Greenberg and Torabi discussed what might happen if the Democrats win the election and how that might sway the market.

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Giving a primer on oil, Torabi said that crude is down for December delivery. However, oil profits surged as third-quarter earnings for

Exxon Mobil

(XOM) - Get Report

totaled $10 billion and reached $5 billion for

Chevron

(CVX) - Get Report

.

If California's Proposition 87, a "special tax on oil producers in the state," is passed, it will affect Chevron because it is the largest oil producer in California, Greenberg said.

However, implementing the tax would create a lot of problems, he said.

"If you're going to tax oil, oil companies are going to stop looking for it," Greenberg said, adding that it's a "predatory tax" in his opinion. "Oil companies are making money because of demand from India and China. It's not Chevron's fault."

Back on his Oct. 30 "Mad Money" TV show, Cramer said he had "little doubt" that on Nov. 7, voters in California will pass Proposition 87, which "seeks to lessen dependence on foreign and domestic oil."

Chevron said this initiative might cost the company $200 million, Cramer said on the show. The measure would impose a tax on oil production. It seeks to raise $4 billion to develop and promote alternative-energy technologies and promote the reduction of petroleum use.

After the "excellent" Chevron quarter and the company's "big find" in the Gulf of Mexico, it will be time to buy the stock Wednesday or Thursday (postelection), when it gets hit by this initiative, Cramer continued.

If Proposition 87 passes, and it is expected to, analysts who cover Chevron are going to have to cut numbers, he explained. "When it gets put on sale, people should buy it."

Aside from improvements in big oil's prospects, another reason to buy Chevron is that it had the "biggest earnings upside surprise," almost a 15% beat, Cramer said.

Plus, the company has "stronger marketing," he said. "It's not burning money any more; now it's spending it."

Also, it's still cheaper than Exxon Mobil and has a "hefty" 3% dividend, Cramer said. In addition to the yield, Chevron has a "sweet buyback," which shows that the company is confident and has "very little debt," he said.

"The last and best reason to buy it is that Chevron has great long-term prospects," Cramer said. "It has taken us out of the House of Pain after its great quarter."

Big Pharma

Apart from big oil, the next big thing on Wall Street during election time is big pharma, opined Greenberg and Torabi.

Just as in the case for oil, "if you steal profit away from big pharma, they are not going to look for new drugs," Greenberg said.

It's "hard bringing new drugs to market" because these companies have to keep testing, he went on to say.

Plus, "prices are coming down" in places like

Wal-Mart

(WMT) - Get Report

," Torabi said. "The most recent headline in big pharma is the

CVS

(CVS) - Get Report

and

Caremark

(CMX)

deal, and they admit that part of the reason they are joining together is to compete against Wal-Mart," she said.

But if the Democrats win, Wal-Mart is "vulnerable" because the company might try to raise the minimum wage, Torabi continued.

In addition to keeping a close watch on whether the Democrats will win the election, as well as on Wal-Mart, it is also important for market players to keep an eye on the dollar, Greenberg said.

The dollar is weaker against the yen, and it's falling against the euro, he said.

Radio Callers

"You might want to sell packaging company

Sonoco

(SON) - Get Report

, take the losses and switch into an oil exchange-traded fund," Greenberg told a caller.

When another caller asked about

Ingersoll-Rand

(IR) - Get Report

, Greenberg said that as the last gross domestic product report was "disappointing," the stock has fallen and has not been performing so well lately.

"If the economy picks up, then you'll see this stock do well," he said. "If there is another disappointing GDP number, then companies like Ingersoll-Rand are going to have some problems."

Responding to his next caller,

Sirius Satellite Radio

(SIRI) - Get Report

is "trading up today," as is

XM Satellite Radio

(XMSR)

, Greenberg said.

However, Cramer keeps saying that Sirius and XM Radio need to merge for their stocks to go up, he said.

"If and when they do merge, then you'll have a real company," Greenberg said. "They're losing money in the meantime, and you could be getting good dividends in other places."

"It seems like dead money here."

There is a high short position in

MasterCard

(MA) - Get Report

, Greenberg told a listener.

"You might want to ring the register on this one," he said. "I wouldn't recommend it here," because it's getting a little too pricey, he said.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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