"The oil drillers have bounced back," Jim Cramer told "Mad Money" viewers Friday. That's why he believes it's time to look at Seitel ( SELA), an unlisted stock that trades over the counter, Bulletin Board style, under the ticker SELA.OB. Typically he doesn't like these stocks because they're dangerous and risky, he said. But Seitel is different because it's a lot bigger than the average Bulletin Board stock. Since its trading volume is decent, a lot of the risks are taken out of the equation, he said. Plus, the stock is trading this way because it's coming out of bankruptcy, and he believes it will be listed with the Nasdaq this time next year. Seitel has the largest "multiclient onshore seismic database in North America," he said, with 34,000 square miles of 3-D data and 1.1 million linear miles of 2-D data. If we're in a drilling boom, he said, oil and gas exploration expenditure should increase by 15% this year. Plus, the government has forgiven the royalties that drillers might have had to pay, and Cramer said that they won't just sit on this money. Companies will invest in new drilling. To get started, they'll have to spend money on data from Seitel, because they need to know the lay of the land before they drill anywhere. The company just became profitable again last quarter, and Cramer attributes this to an increase in drilling activity, adding that the company will continue to be a "cash-flow machine." The company's story is the "anatomy of a good recovery," he said, and it has exceptional operating margins.
Here Come the RobotsRobots seem inescapable, because workers are being replaced by machines, Cramer said, not just by cheap foreign labor. Manufacturers in America face two problems, he said. The first problem is rising input costs, including rising wages for labor, more expensive raw-energy costs and higher energy prices. The second problem is that they have limited pricing power, meaning that they can't raise prices too high. So they have to cut costs by becoming more efficient, and Cramer said that means replacing humans with machines. An industry report said that in 2005, North American companies placed orders for 18,228 robots valued at a total of $1.16 billion. Cramer said that's a 23% unit increase and a 17% dollar increase. He said that the way to get rich off of industrial automation is to buy Emerson ( EMR), which makes industrial animation systems, and Rockwell Automation ( ROK), which makes controls. Both companies beat their first-quarter numbers by a mile, and based on their P/E ratios they are inexpensive stocks.
Homework Case StudyWant to think like Cramer so you can buy like him? He took viewers through his homework on the stock Glenayre Technologies ( GEMS) to show how it's done. He began by checking out a research note from Morgan Stanley that said investors should buy Glenayre because it looks ready to break out. He's not a technical analyst, but he listens to them, and he decided to further investigate the maker of messaging systems and manufacturer of CDs and DVDs. He said that he hasn't thought about Glenayre in six years because of some legal problems and the fact that telco went through a bear market.
G-III's New Seasonless TicketCramer welcomed the chairman and chief executive of G-III Apparel Group ( GIII), Morris Goldfarb, to talk about why the company's earnings suffered. Goldfarb agreed with analysts that the company got nailed because warm weather kept consumers for buying its winter wear. But Goldfarb said that the company is diversifying out of just winter-weather clothing. In fashion licensing, the company will work to produce a line for Wal-Mart ( WMT) that will come out multiple times a year, making it seasonless. And it has added Calvin Kline's suit business, too, Goldfarb said. To view Cramer's interview with Goldfarb,
Lightning RoundCramer was bullish on Quanex ( NX), Willbros Group ( WG), Fluor ( FLR), Coldwater Creek ( CWTR), Peabody Energy ( BTU), Viisage Technology ( VISG), Marvell ( MRVL), Broadcom ( BRCM), Hansen Natural ( HANS), Apache ( APA), Devon Energy ( DVN), Anadarko Petroleum ( APC), Matria Healthcare ( MATR), Digital Insight ( DGIN), RF Micro Devices ( RFMD), Skyworks Solutions ( SWKS), Honeywell ( HON), Valero ( VLO), JDS Uniphase ( JDSU), Hexcel ( HXL), Directed Electronics ( DEIX), Ruby Tuesday ( RI), Cheesecake Factory ( CAKE)and Headwaters ( HW). Cramer was bearish on Cogent ( COGT), General Motors ( GM), Tribune ( TRB), Empire Resources ( ERS), Wendy's ( WEN)and Distributed Energy Systems ( DESC).
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