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When the market is getting crushed, sooner or later you need to start bargain hunting, Jim Cramer told viewers of his "Mad Money" TV show Tuesday. Bargains are found in ice-cold sectors that people hate, ones that can make market players money. And the bargain right now is in the natural gas sector, he said. The stocks in this sector have become too cheap and are trading like value stocks. Right now, said Cramer, natural gas is trading in the lowest gas-to-oil ratio that he can remember. Cramer believes the bears are going to be dead wrong when it comes to the natural gas market. When we have a warm winter, natural gas goes down one point; but when we have a harsh winter, it could go up four points, said Cramer, and that's a good risk/reward. Since we are value hunting, said Cramer, we want the stock that represents the best bargain in the natural gas market, and that is Carrizo Oil & Gas ( CRZO). It is Cramer's play, he said. Houston-based Carrizo is a large player in the Barnett Shale, a source bedrock in northern Texas that is producing natural gas through bacteria breakdown. Carrizo, which as of December 2005 operated 106 oil- and gas-producing wells, also has exposure to the Gulf of Mexico, Cramer said. The bottom line is that this is not a hot group or a hot stock, it is a cold stock in an ice-cold sector, he said. Carrizo is a cold stock because natural gas is way too cheap. When a caller inquired about Cheniere Energy ( LNG), Cramer said he liked it when it was lower, but did not recommend it now. "The problem with liquefied natural gas is that I don't think that any of its terminals are going to be built," Cramer said.
Reading's Fundamentals"Yesterday, I believe we found a bottom, or a near-bottom, in WCI Communities ( WCI)," said Cramer, who featured the stock on Monday's show,
Three Kings of Cash"Cash is the best defense in a bad market," Cramer told viewers. "Cash is king right now." Cash means flexibility, it means the company can perform buybacks, it has a cushion in case of a nasty selloff. In this particular market, cash is the queen, rook and bishop, too, he said. But cash isn't everything, if the company's not strong. An example of a bad company that's flush with cash is Gateway ( GTW), said Cramer. Players should avoid Gateway, Cramer advised. It is only worth the cash it has in the bank. The three cash kings, he said, are:
- Apple Computer (AAPL)
- Cnooc (CEO)
- Schering-Plough (SGP), which he owns for his
Action Alerts PLUS charitable trust.
Talking Ethanol"This market has gone from loving speculative plays to despising them," Cramer told his viewers. "I like speculative plays that are making a lot of money, even if right now they are cool." Cramer welcomed Tim Newkirk, the COO of MGP Ingredients ( MGPI) to his show. MGP's two core businesses, said Newkirk, are the food ingredients business and the distillery business, in which it has a segment of a fuel-ethanol business, which has taken off dramatically. Is it true if you don't add a little percentage of gasoline to ethanol, it is labeled as alcohol? Cramer asked. Yes, that is true, said Newkirk, adding that to make nonfuel-grade ethanol requires different sets of equipment. If you look back at the industry, it has always met demand requirements, Newkirk said. There is a tremendous amount of hype, to the point of overhype. There is good money to be made in this business, both by companies and their shareholders, but the hype is a little on the exuberant side right now, he said. "If you want to speculate on ethanol, this is a good company," Cramer said, He said he likes it more than even Archer Daniels Midland ( ADM) "at these prices." To view Cramer's interview with Newkirk,
Lightning RoundCramer was bullish on Citigroup ( C), ING Group ( ING), National Oilwell Varco ( NOV), Burlington Northern ( BNI), Oceaneering International ( OII), Carrizo Oil & Gas ( CRZO), Foster Wheeler ( FWLT), WCI Communities ( WCI), KB Home ( KBH) and Sealy ( ZZ). Cramer was bearish on E*Trade Financial ( ET), Wachovia ( WB), Avaya ( AV), JDSU ( JDSU), Helix Energy Solutions ( HELX), Cemex ( CX), Honeywell International ( HON) and D.R. Horton ( DHI). For more of Cramer's insights during the most recent Lightning Round,
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