Natural resource stocks have been flooded with buyers, said James Cramer on his
"RealMoney" radio show Thursday, and the situation is only going to intensify next week.
The reason, said Cramer, is that at the beginning of the quarter, mutual funds and hedge funds will be seeing new money, which they'll use to buy stocks they know and that have been working for them. That means many will be buying natural resource stocks.
Is the "relentless buy interest" in natural gas, drillers, coal, copper and mineral stocks extreme? Cramer asked rhetorically. In the past, for example,
( PD) has raised its dividend during good times to a point where the stock yielded 6% to 7%, said Cramer. It currently yields just 1%, he said.
CEO Gwyn Morgan predicted back when natural gas was about $6 that his company's market value could double if natural gas doubled. It's now about $12, and EnCana has doubled. Perhaps the company's market value could double again, said Cramer, if natural gas goes to $20 or $30 this winter, which is where Cramer thinks it will go.
The bottom line, said Cramer, is "you have to own some of these stocks." Cramer would sell underperforming drug, beverage, paper or chemical stocks and buy natural resource stocks. He likes EnCana, which he says is the "cheapest" natural gas stock in America. He also likes
, the "second cheapest." Cramer also likes driller
and rig manufacturer
National Oilwell Varco
. The "cheapest pure domestic oil and gas play" is
, said Cramer, because the company has the lowest multiple of gas to cash flow.
In response to a question on Japan, Cramer said "Japan is for real," and he likes
Mitsubishi Tokyo Financial Group
( MTF) and the
iShares MSCI Japan
Commenting on health care, Cramer reiterated his bullishness on
, saying he expects a tremendous blitz by UNH in the next 10 days to enroll seniors under the new Medicare prescription drug plan.
Cramer is bullish on
, saying the company's backlog has grown 100% since last year and that he sees big opportunities for growth to continue.
But Cramer has turned bearish on
Lions Gate Entertainment
, saying he disapproves of the company's planned acquisition of Image Entertainment.
On Internet stocks, Cramer says he expects a "good quarter" from
will show "tremendous" advertising growth this quarter and is equally valued with
now. If Cramer had to pick one, he would pick Yahoo!. Google is in a "holding period," he said, "digesting" its recent stock offering. Cramer advises being in Google before it is added to the
, which he feels is imminent.
Research In Motion
( RIMM) reported results Wednesday that showed a "clear slowing of user growth." However, Cramer is not as negative on the stock now as he was when it was at $76. Nevertheless, "I no longer think that is the place you want to be," said Cramer. RIMM traded at $70.73 late Thursday.
Among energy trusts, Cramer said
Paramount Energy Trust
is "OK," but it is not his favorite. He likes
BP Prudhoe Bay Royalty Trust
San Juan Basin Royalty Trust
. But, his favorite is
Fording Canadian Coal Trust
Finally, Cramer said
is "taking the wood to
." Cramer would sell Coke and buy Pepsi.
At the time of publication, Cramer was long EnCana, Fording Canadian Coal Trust, UnitedHealth Group, Cimarex Energy and Yahoo!.
James J. 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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