Cramer Cries 'Foul'
When an analyst at Goldman Sachs downgraded the stock of semiconductor maker NXP Semiconductor (NXPI) , Cramer threw the red flag, calling the logic behind it ridiculous.
Cramer said the same analyst first downgraded the company from buy to hold in January, missing a 50% move higher in the stock. But now it appears he's digging in his heels, doubling down on his earlier mistake,
According to the analyst, NXP is in a low-margin, commodity business and the markets shouldn't value the company with a premium multiple. That would be true, Cramer argued, if NXP only sold commodity chips. In fact, that is only a small and declining portion of NXP's business.
The analyst also didn't like NXP's exposure to the fickle mobile device market or the company's stock-based compensation plan. Here again Cramer argued that mobile devices is only a small portion of NXP's business and its stock compensation is more than made up for by its huge stock buyback program.
With 50% gross margins and growing proprietary markets, Cramer said NXP is actually inexpensive, and the weakness created by these uninformed downgrades is certainly a buying opportunity.
In today's installment of his "Behind the Boom" series featuring America's oil and gas renaissance, Cramer spoke with Rick Shearer, CEO of Emerge Energy (EMES) , the fracking sand provider that has seen its stock soar 600% since its IPO in May 2013.
Shearer explained that the type of natural sand that Energe provides is the perfect material for 90% of the hydraulic fracture wells out there today. He said while ceramic materials are better in some cases, they cost $700 to $800 a ton as compared to just $60 to $65 a ton for sand.
Shearer continued that Emerge is already doubling its capacity, bringing another five million tons online this year, making it the leading provider in the industry. The company is not stopping there, however, and already has another mine and plant in development.
Emerge's biggest problem, though, is a lack of rail cars to ship the product, Shearer explained. He said while the company uses 4,600 rail cars today, nearly 8,000 will be needed to support the new mines being built.
Cramer said Emerge has seen remarkable growth and he continues to like the company.