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tv   Mad Money  CNBC  January 12, 2010 6:00pm-7:00pm EST

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hey, i'm cramer. welcome to "mad money." welcome to cramerica. my job, entertain, educate, coach. call me at 1-800-743-cnbc. holy cow! the darn thing can go down, too! it doesn't just go up! if you prick this market like alcoa did last night, sure
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enough, it bleeds. if you poison as congress and the white house seem to be doing, the darn thing can die. the s&p dropping almost a full percent. nothing like a little shakespeare to brush up on the top of the show. that's from the merchant of wall street for those who need the classical reference. yeah! oh, yeah! we got pancaked! oh, yeah. panca pancaked! jackhammered! annihilated! bad! the forecast, to quote mr. t., one of the few artists who deserve to be mentioned in the same breath as -- was nothing but pain. and we got it in spades. what's going on? what could stop this beautiful market which until today seemed faster than a speeding bullet? more powerful than a locomotive? the answer is simple. we forgot. we forgot that the market can
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go -- can't go up 3% every single week. we forgot that stocks can go down, too. we forgot that the banks are still crucial to the american recovery. and the president wants them taxed. in order to balance the budget! they know nothing! and perhaps boost his popularity by teaching the fat cats a lesson. it's easy to take these guys on. playing with the house's money. unfortunately, that is not the plan. the president wants to go after the banks themselves. and while we may all hate them for paying us nothing on our savings accounts and frolicking with huge bonuses while they foreclose on our homes, unfortunately we need banks to lend in order to get the economy moving. >> all aboard!
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>> and to lend, the banks need cash. so when we take that cash away from them, when we tax it, we hurt everyone. let's be a little so fest kate -- sophisticated for a moment and show some rigor. we'll be punishing a lot of banks that loan to small businesses in order to get back at goldman. which, by the way, doesn't even do that kind of lending in the normal course of business. i say, argh! remember my mantra. if washington helps stocks go up, i'm on board. but if washington kills one of the rolling bull markets and the one we had in banks was pretty rolling, we're going to get mr. t's forecast, shylock's plea in the merchant of wall street and super bear is going to cause us to get hammered. but let's not -- but let's not become too crazy here.
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this market needed a breather. it needed an excuse. and washington provided a terrific pretext. because obviously the banks weren't the only losers today. all that red hot material stock smoking. sizzling, as i like to say it. the coppers, the steels, the mighty equipment players. they all got crushed! in part because of fears about china. the source of most of the demand for the stuff. people think it might cool off. now, adding a reasonable pullback in oil, a decline in the smoking agricultural sector courtesy of a big selloff of corn, and the jackhammering all makes sense. i'm bringing out every big gun tonight. nevertheless, to quote those buffett like sages, the spice girls in their seminal stock
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text wannabe -- ♪ if you want my future, forget my past ♪ >> what a classical reference right up there with shylock. if you want my future were forget my past. this day should be filed away as past. here's why. first, i did the darn homework. alcoa wasn't all that bad. i was actually on the conference call. can you believe it? what a loser i am. bu i may replay it during the middle of "american idol" tonight just to show i care about my show. i think this company is going to have a huge year in 2010. as some of the their key markets like industrial, gas, turbines, auto, and aerospace, alcoa, i am not a seller! i'm a buyer. second, we don't even mind the pullback in china, okay? we don't mind it! as a matter of fact, we don't like that sucker overheating. huh-uh! and cause the government, the government to shut down the
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economy! remember, chinese-style capitalism is controlled by the government. and the government can take away the poo poo platter any time it wants! third, we don't want inflation! and constantly escalating prices in oil and food can do that. so i can leave with a breather in those commodity stox. finally, tech. it's no secret tech has been lagging. the tech heavy nasdaq was up 44%. everyone partying like it was 1999. i don't need to tell you what happened in 2000. unless you were in middle school at the time. we got destroyed as overextended tech stocks simply imploded. what do we do? what should we do? okay. days like today are -- do you know that four times last night i repeated myself? i said nobody ever got hurt
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taking a profit. i was like a broken record, know what i mean? join the darn seller. take something off the table. in the immortal words of louise cramer, my late mom, go buy a sweater with those winnings. three bells! the other discipline i'm always preaching to help you stay in the game is diversification. the only free lunch! do you know that the stocks of companies that make what you buy at the supermarket and drugstore actually had hard rallies today? take a look at kimberly clark up 4%. i see people blowing their noses, sneezing like their darn fool head is coming off. you need a couple of those defensive names as they make the pain a little easier. you may not float like a butterfly, but you won't get stung like a bee. next, ready your tech buys. nothing's wrong with tech. no tech company blew up. in fact, we got good news from a couple of tech companies that only i would know, okay? because i'm really a geek.
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emulex and cirrus logic. finally, remember our long-term themes. ones that can last through an extended selloff. that's why we set them up. that's why we gave them to you for the active investor in 2010. foreign stocks, gold stocks, tsunami stocks. every one of these sectors got hammered today as did the higher yielding stocks to sustain our portfolios in hard markets as i tell you in "getting back to even," my book. here's the bottom line. the market's throwing us sell. we don't run away from sales. we wait them out. we look for buys. we take profits where we have them. big ones. we're not greedy. we look to if you haven't taken any profits, you better start. you're getting greedy. in other words, frankly, it's business as usual in the country of cramer. john in texas, john?
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>> good afternoon, jim. calling with a booyah from dallas, texas. >> okay. let me give you -- oh, boy. a cowboy booyah. do i really? my ridiculous stage director likes the cowboys. go ahead. >> recently you emp hasized the importance of international diversification. specifically dedicate 20% of one's portfolio into international investment. at least in part because the business climate is better in those countries than it is in the united states. >> right. >> my question is if other countries are so much more attractive and business friendly than the united states currently, should we have even greater than 20% exposure to international? >> i waffle over this. 20% is foreign. 10% is gold. that leaves 70% for united states. i am not giving up on this country. we have a lot of great values. remember, many of the s&p stocks and most of the dow stocks are international companies. they will take advantage of exactly what you're talking about.
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20% overseas is very high. probably the highest of any money manager i know. that's how far i'm going and not a percent further. i need to go to mitch in south carolina which i call carolina. mitch? >> got a big-time booyah from charleston, south carolina. >> go ahead. >> -- around $40 a share just before the recent push. currently up about 20% and definitely think the stock has more room to run. my question is around the fact that i bought fluor in '09 and don't think it's a trade i can turn into a long-term capital gain due to force volatilitvola >> it's an up stock. i just started buying it for my -- send out the balloons. send one out today. there's much good news. they even got a big contract. to help bring out gold in latin america. a winner, not a loser.
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i don't want you selling any of that. now, mohammed ali. time to file away the past as the immortal spice girls said. i'm kind of like -- which spice am i like most? moron spice. the market's throwing a sale. you should be shopping for sales. not run away from them. "mad money" will be right back. coming up, catching fire? as the detroit auto show kicks into high gear, people are asking what will fuel the cars of the future? cramer goes one on one with clean energy fuel ceo to find out on the executive decision. plus, job start. not all auto suppliers are created equal. cramer takes three for a test drive and pits their fundamentals against the technicals to pick a winner. on an all new "off the charts." >> later, stay tuned as we crank up the volume. cramer goes all out as the calls
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keep coming in. try to keep up on a high impact "lightning round." all coming up on "mad money." what are you doing...? calling chase sapphire, seeing if we have enough points to stay longer. now? you don't have enough time... and you have to push all those buttons... no buttons, someone answers every time. yeah, right... bet you a massage... yeah, ok. hi, julie...
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detroit auto show ongoing, i got to turn up the heat on natural gas. the transition fuel that offers the best way to break our addiction to foreign oil, fight global warming, and create jobs here in america. but this is not a political show. the main reason we like natural gas is it can make you money. more money than any other sector. more money over the long term than nearly any group of stocks i've ever seen in my life. over the last ten years, xto, the one that just got bumped by
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exxon. chesapeake. how about range resources? we had the ceo on recently. apache up. devon up. and anadarko. the french oil joint has come out in favor of natural gas for their acquisitions. cash speaks louder than words. the group can go still higher. as we transition i believe to a future where more and more vehicles run on natural gas. a passenger car running on natural gas has about 30% fewer greenhouse gas emissions than a regular car. a commercial truck, more importantly, would save about $20,000 a year on fuel costs. that's not chump change as we're about to find out. natural gas is simply better than any other viable alternative. we'll talk about that in just a moment. believe me, that thesis is why we embrace clean energy fuel,
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clne. it's been our favorite speculative natural gas play. it's up 89% since we last spoke with ceo andrew littlefair on august 11. stock was at $9.46. we were pounding the table. the stock's up even more. 412% since the previous time littlefair came on back on november 20th of 2008, stock was at $3.49. it was hard to get a ceo to come on tv. they were running for the hills. clne designs, builds, finances and operates fueling stations that supply compressed natural gas and liquefied natural gas mainly to heavy duty vehicles. the company reported real solid third quarter november 9th. volume was up 58% year over year. the end of last quarter it had already been awarded $34 billion from the stimulus package to build 11 natural gas fueling stations. if the stimulus had included more of this kind of thing it
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might have actually stimulated the economy. the natural gas act, if this passes, that would cover as much as 50% of the cost of operating a vehicle on natural gas. clne gets a massive boost. also a number of gas electric hybrids at the detroit auto show. the main focus has been on regular battery powered models the press is so in love with. shuttle operators in dallas/ft. worth, houston and las vegas airports announced yesterday that they have contracted with a company to build and maintain three new airport adjacent compressed natural gas fueling stations. clne has been on fire. today's pullback may give you a nice chance to buy at a discount. with all this news, and there's a ton of it, we want to check back in with clne's fabulous ceo andrew littlefair. how are you, sir? >> i'm great. >> good to see you. have a seat. >> thanks for having me.
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>> all right. natural gas act. merrill lynch comes out last week, recommends your stock. this is bank of america, merrill lynch. not some speculative house. they're saying there's a good chance the natural gas act could pass pch they like the stock either way. what are you hearing? it's got a lot of cosponsors. it doesn't seem to be part of the chatter. >> i like the position of it. we're held back because of the health care debate. we're being assured from the leadership in the senate they think it will go once you get the health care debate out of the way later, after the state of the union, that you'll begin to see energy bill likely talked about. and they've told us that they think it's perfect for the nat gas act. >> compare what you're getting in subsidies versus what you could get. >> the real important thing is what it's going to do is it's going to double the incentive for the vehicles, for the trucks. >> okay. explain to people the numbers. you've given them to me. 10% of the trucks. tell me. >> yeah. it's huge. i mean, there's 3 million
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18-wheelers in the united states. if you had -- let's just say if you had 300,000, 10% of the fleet on natural gas, that's the equivalent of using 6 billion gallons of fuel. it's about 1.3 tcf of gas. so my friends like aubrey and all the gas guys have figured out it could be important for them as well. it's huge for america. you don't have to change every car in america. begin to focus on the trucks that move america's goods. >> let's talk about that. exxon recently bought xto. i doubt they did this with the idea the natural gas market is going to look like this ten years from now. what do you think is in the head of an exxon when they make that purpose? >> to move the needle for exxon you got to have size. it certainly does that. if they put fuel in the gas tank, it's the equivalent -- let's just say today they put it in at $2.25 a gallon natural
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gas. they'd sell it on the nymex today, what, 550. that's the equivalent of selling the natural gas at $18. it's huge. there's some cost. you have to back out. when you do that you're still getting almost $10 in -- >> are you afraid exxon will be your competitor? >> i'm not. jim, today, they're in the consumer market. they don't fuel trucks. you're not going to pull a track truck or 18-wheeler into an exxon station. i see a day when the big gas guys will actually be making lng, liquefying their gas, getting a premium for that and companies like ours will put it into the fueling. >> i picked up the paper today. it's all about battery operated cars. i speak to my friends in the natural gas business, they say don't forget you got to plug them into something. arguably whether they plug them into activities they better be gas fire. someone asked me last week, ask the guy if i had a car that was
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gas powered can i hook it up to the line i use for my barbecue? >> yeah. in fact i have a small compressor in my garage. same gas that heats my pool or stove. i fuel up in my garage for $1.20 a gallon. 60 million homes have natural gas. >> right. >> you've been on this for a while. it's taking a while. i think it will first start with the fleets. it is interesting in europe there's 62 makes and models of natural gas vehicles. if you want a mercedes, gm, ford, you can get it. not here. we only have one. that's going to change. >> absolutely. >> because the economics are too good. >> i felt like i was in the only gas powered chopper, the only gas powered motorcycle in the world when i went to university of oklahoma. >> that's right. >> we're still in our infancy here. there are countries that are taking it up. tell me about some of the countries that have adopted this fuel. >> in argentina there's 1.5 million vehicles. brazil there's 1 million vehicles. iran, pakistan, egypt, they're all moving to this.
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germany. it's beginning to happen all over the globe. two years ago there were 5 million natural gas vehicles in the world. today there's 11 million. >> that's unbelievable. >> something's going on. >> we had al mulally. one of our heroes. we mentioned natural gas powered vehicles. he didn't seem to be that impressed with it. >> well, you know, let's hope he changes his mind on it. >> he's a bright guy, though. i don't like to go against him. >> no, no, i wouldn't. ford sells one in europe. >> right. >> when you begin to put the tanks in and they do what they can do so well and you optimize the vehicle to run on natural gas, see, natural gas is 130 octane. >> i was talking to a friend that said why don't you bring up the fact it's low powered. that is untrue. >> that is propane. >> it's 23% better on carbon. we have it here in the country. it'll happen. it'll start with the truck.
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you're not going to have a battery truck. you might have a little -- battery car someday. you're not going to have a battery truck. natural gas will go into the medium and heavy duty trucks for sure. >> one last question. it's very imperative i ask this. people are going to watch the show, going to want to buy the stock. do you need to raise money? if you do i need to tell people there's a fund raising activity that -- >> no. 2010 our budget is set. we have money for that. if the nat gas act passes -- we're seeing an inflection point. >> why do you think i'm hounding this? i was the lonely voice in the world. i sure don't feel like that anymore. >> since i was last on here our bag l backlog of stations has doubled. we're set for 2010 unless the nat gas thing really takes off. >> understood. andrew littlefair, you're a delight. after the break i'll try to make you even more money. coming up, job start. not all auto suppliers are created equal. cramer takes three for a test
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drive. and pits their fundamentals against the technicals to pick a winner. on an all new "off the charts." later, the madness goes nationwide. >> a big booyah! >> booyah in the scorching deserts of west texas. >> from southern california. >> jim takes the calls from all across cramerca. >> from st. louis. >> from phoenix. >> from seattle. >> in an all new quick fire "lightning round." all coming up on "mad money."
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then get a four-star hotel at a two-star price from when four-star hotels have unsold rooms they use hotwire to fill them, so you get them at ridiculously low prices. ♪ h-o-t-w-i-r-e ♪ for the last three years, the auto suppliers have been among the worst groups out there to own. this was a sector that was lethal to your wealth. as auto sales declined to levels that we haven't seen since the 1950s, and nobody seemed to want to buy new cars.
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to quote cramer favkesha, if i own one of these stocks, i got no money in my pocket. now we're selling cars in america. witness the strength at ford. inventories which are now at historic lows need to be rebuilt. so the auto suppliers are back in style. in fact, the stocks are back from the dead and they are smoking hot. best of all, there aren't that money of them. since there are only a handful of ways for money managers who want exposure to auto parts, these stocks have real scarcity value. that should allow them to rally even harder than you would expect. also put a floor under them. economics 101. letsz supply of stock means higher prices. especially when there's this much demand. as your investing coach i'm always trying to find the sectors that are in style or about to be in style in the wall street fashion show. right now the auto parts suppliers are it. this is a group i think whose time has come even though the market was down today. that could be opportunity. that's why we're taking a look
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under the hood, okay, to see which of the best stocks to buy now that the industry is fuego. yesterday we highlighted johnson controls. if you don't know johnson controls you might know interstate batteries, die hard. johnson controls is not a pure play. it has other divisions that have nothing to do with vehicles. we're going to go to three pure plays. dana, leer and magna. these are three stocks i wouldn't have touched with a ten-foot poll including the one we had on the show that chipped my tooth a year or two ago. these are being bought hand over fist by portfolio managers who see the same things i see. they want more auto exposure. they're tired of playing ford. at first glance all three companies look pretty similar. what do you do? to help you decide what's best, we're going to do what i used to do at my old hedge fund. a three-way off the charts steel cage death match. ultimate auto parts fight club.
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then we'll see if the fundamentals confirm what the charts are saying. when all looks equal hedge fund managers open the door and look at the chart and see which is the best one for right now. let's take a look. l.a. little, a fabulous technician, colleague at the also has his own website. little says that magna has the best chart. year comes in second, dana third. this is important when you like all the stocks the same as much as i do. what makes magna so great? take a look at the monthly chart. that's where he starts. according to to little, this is a thing of beauty. a mona lisa chart. 71.50. i think it goes higher. how does he get that? he's basing it on the last big rally. from point a to point b. he expects the current rally starting from point c, which gives you the $71.50 target. that's about where magna starts to hit its long-term resistance.
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the level where sellers overwhelm buyers. which gives the stocks about 12 points of room to run. a better representation will come in a second. little likes to use charts to confirm trends. on magna's weekly chart, this is a better view of how much you can win here. okay? on the weekly chart, he's thinking it goes up like that. 59. he uses -- this is a shorter investing time frame. the action here confirms his bullish thesis. with the stock rising on higher volume, see this how the volume is going up, that's reallily important. that's a sign that the move is telling the truth. does it mean you should buy it here right now? wait a second on that. all these stocks that had huge runs, as i said they're very much in favor now. to get a decent risk/reward ratio where the potential upside is twice the size of of the potential downside, wait. maybe it's worth waiting. i just don't think you're going
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to get that. how about lear. this one's harder. little has a short-term trade. he likes to look at daily and monthly. he only gets daily here because we don't have a long enough trend. he thinks the chart looks good with a confirmed bullish up trend. technicians use a lot of different terms. lear is rising on increasing volume. that means it's telling the truth. he thinks this one goes to 78. maybe you don't think that's enough of an upside, 71 bucks. the current trading rate is about $8. the same size as when lear was in a similar situation november. he's saying it's a buy between 70 and 71. i agree with that. dana. all right. this one comes in last because its stock is very extended. little sees some red flags in the weekly chart. let's take a look at that. dana has been rising on declining volume. remember, all the others have been rising on advancing sol yum so they're telling the truth. this one's on declining volume. technicians skip the fifth amendment and use volume as a
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polygraph to tell when a move could be lying or trusted. the other moves were all on up volume. this one's on down. he thinks the stock could be lying. given how much dana has already run, little doesn't think there is a buyable entry point anywhere near the stock's current price. that's really important for you. dana has been the talk of the town lately. it's been the talk of the town. it's the one everyone wants in. he's saying, be careful. it's magna, mga. then lear, lea. then dana, dan, based on the charts. the fundamentals pretty much confirm that. magna is the most diversified of the three. vision electronic, they got some real technology. exterior power train, roof parts. vehicle engineering and assembly service. it's a great outsourcer for auto companies. one of the few auto suppliers with more cash than debt. it is one of the most profitable players in the space. that's cost cutting, too. yet foolishly magna stock trades
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at a big discount to its competitors. even though it never went bankrupt. big discount to dana. i mean, dana you could argue is a piece of junk. we like lear, too. so much we recommended on november 20th. it was 63 bucks. 11% gain so far. lear is a seating and electronics maker that has exposure to hybrids. one of the strongest capital structures in the business now like magna. it may not be king lear. dana is the most speculative play. its earnings are still negative. it's the smallest of the three. makes akles, drive shafts, heat shield ts, engine sealing systems and cooling and heat transfer product. it's still restructuring its business. the company had a bankruptcy a really bad time. january 31st of 2008. its debt laden balance sheet while much improved is in much worse shape than lear's or magna's. dana is up 4,804% since march
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6th of last year. easier money has clearly been made here. while i think it can keep going higher based on strength in the sector, it is my least favorite of the bunch. to misquote my favorite line in ghost buters, there is no dana. only magna and lear. refer to the charts. that's how we know magna is the best pure auto play with lear in second and steely dan pulling up the rear. should you buy any of them? the charts say you don't have to. let the correction take them down to levels you like and buy magna, secondly lear and then only last would i buy dana. perhaps under ten. may i go to jed in montana? >> here's a missoula, montana, booyah for you? >> i've done some hiking there. it's gorgeous. back at you. >> my question for you today, on hunt ls
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huntsman corporation what's your projection as a take over target and potential growth? >> i look at a huntsman. like it at three. liked it at six. at 12 the easy money has been made. this one's had a very big move. it does make all sorts of plastics. i suggest you buy pol if you want to speculate in the group. polly one. that's a better play. al in florida? >> booyah, jim. how will american -- >> when i started doing this segment, i thought about axle, axl, because it is a darn good company. they'd moved so much i felt it was too late in the game. i'll tell you absolutely, al, axle is a great company. you could fault me for not including it in this three way death match auto ultimate fight
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club situation. because axl is real good. i'm getting you in the auto zone for tonight's "off the charts." tick tock on the clock, right? the rest of the lyrics are so foul i can't use them. least dana, second least lear, and magna comes up the best. she is foul mouthed. she can come on the show any time she likes. coming up, feel the thunder approaching as jim takes a full on -- from cramericans everywhere. ♪
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it is time for the "lightning round." how about rapid fire coals? just to be clear, i don't know the stock prices, i don't know anything ahead of time. then the lightning round is over. are you ready? start with john in west virginia, john? >> hi, a big booyah from huntington, west virginia! >> oh, man. sorry, steve. no disrespect. go ahead. >> i used to live in valley forge, pa. >> speak to me! >> i need to know what do you think about united bank shares incorporated? >> you know, this is a very good west virginia-base ed bank whic maybe you bank at. i think regional banks are a great place to be. while i'm at it, let me tell you
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i recommend associated bank shares, aspc, they priced a deal at $11.15. i wouldn't mind if you took a little profit on that. that's okay. glen in florida, glen? >> hi, jim. i'd like to give you an alabama, crimson tide national championship booyah! >> thrilled that you were participating. that was a great game. how can i help? >> my stock is apoll o group, apol. >> going to the dogs. going to the dogs. we are not buyers in any of those online education stocks. they have had their day. any left, we're a sell, sell, sell. i need to go to james. >> booyah, jim. how is it going? >> not bad there, chief. how about you? >> good. i just want to get your thoughts on wnr. i saw they had kind of a big short -- >> i don't really care for the refiner. if i want to own a refiner, i want to own marathon which i've
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been recommending. or chevron which did indicate just last night that refining margins are bad but it's got great growth. you need to be -- if you want refining you've got to be part of chevron. that's really it. don't own it just by itself. i'm going to curt in pennsylvania. curt? curt? >> yeah, let me give you a big bad large pennsylvania booyah! >> it's the king -- >> i'm hurting today. i don't know which i feel worse about. the eagles tonight or what happened to my second biggest position. >> i can't help you on the therapy about the eagles. i'm in therapy about the eagles. i can't help you. i'm just trying to figure out which medication, my friend. >> sales >> they did a convertible debt deal. once that convertible debt is digested you've got to pull the trigger and buy. i don't like to see these deals because what happens is
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treasurers buy the convertible bond and sell the com stock against it. i think the pressure is over. i'd be a buy, buy, buyer. brandon in illinois, brandon? >> hey, jim. big university of illinois booyah! >> how much do i like to fight in illinois. i wear my orange and blue shirt. i love it, i love it, i love it. give me a name, give me a name. >> the question i've got for you today is macy's, ticker m. >> it's ridiculous that it's at 16. terry london is doing a great job. let me throw in sacs. let me throw in coach. let me throw in tiffany. these are all winners. high end is good. i regard macy's as high end. i still like the f corp. everyone's getting skittish. not me. i like them. taking another call. tony in my home state of pennsylvania! >> booyah! >> booyah!
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what's up? >> pmcr. >> you're talking -- you'll love this. caller asked me if i liked the kuerig. it brews in like 30 seconds. my whole life has been changed. green mountain besides my own personal experience is a buy. mark in california, mark? >> jimmy! >> what's up there, sparky? >> booyah! >> hey, man. i'm giving you a red hot california booyah right back at you. >> how you doing, my friend. i want to say thanks for all the hard work and sound advice that you give. much appreciated. >> not a problem, my man. >> my question is regarding a i
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activision blizzard. >> no, no. sell, sell, sell activision. i'm jazzed here. ways hungry for ideas. trading is all about strategy. and strategy... is all about information. heat mapping shows me where the money's moving. twenty five hundred stocks... one quick look. that's where the action is. plus, this amazing gadget... it's called the telephone. i can call td ameritrade anytime and talk trades, strategy... anything. td ameritrade. built by traders, for traders. this is what i need. announcer: trade commission free for 30 days, plus get 100 dollars cash, when you open an account.
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last week john in california sent us an e-mail bill the north american natural gas company he thought we were overlooking. it is pronounced encana. eca. we've been turning up the heat on natural gas. we want to highlight the new play on our favorite transmission fuel. especially because did you know, and i heard this on bloomberg, that u.s. just passed russia as the number one producer of natural gas in the world? will someone please tell me why we're doing opec's bidding when we have enough gnarl gas to export around the globe? it makes no sense to me. john's right, we've been
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overlooking encana. the reason we've avoided this one is the structure's too complicated for us. encana was a mosaic of traditional oil, natural gas business. but that changed in november. company decided to split itself in two. the vast majority of the assets for refineries at the sands projects, no, thank you, allocated to a new company called cve. may i ask, where do they come up with these names? is that done by sterling cooper, my favorite ad firm? there are many assets the u.s. companies and canadian properties stay with in canada. that's what we like the most. how does encana look? 50/50 split between the united states and canada. those two countries are friendly the last time we looked. at the end of the quaerter of 2009, encana was the second largest natural gas producer in north america. one of the largest acreages in
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north america. more than chesapeake. come on. the company expects to grow an impressive 9% to 12% over the next five years. reminds me of xto a couple of years ago. encana is in a number of areas. its properties are solid. especially the shale place. encana's in places like the largest shale plant in canada. that would power all the trucks in the world for like five years. that's not true. how about all the trucks this the united states for a year. and montney shale, this is like saudi arabia, all in one company. companies finding costs cheap. $2.75 ther 1,000 cubic feet. it's up like 5.5% right now.
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operating costs are about $1 per #,000 cubic feet. 50% of the product is hemmed at 2010 production at $6.07. give you 2% at superior to most of its competitors. most of them provide only minimal numbers. this one trades at a discount to the other natural gas play. encana is a natural gas play. that's what the market wants. that deserves a premium. how about a $50 price target. a lot of people like me, they just haven't done the work. i thank john for pointing encana out to me. i will pay him my highest compliment. john's got horse sense. bottom line, sometimes simple is better. now encana is focused entirely on natural gas, it can prove it
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even further, i'm thinking encana is a buy, buy, buy. time in the penalty box for missing this one. the cheapest of all gas plays. i should have done the work before john boy alerted me to this unbelievable attractive opportunity. maybe my new favorite in the natural gas patch. rrrrrrrrrrrrrr
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i like the rally at the bell. maybe the rally could resume. i like to say there's always a bull market somewhere. i promise to find it just for you here on "mad money." i'm jim cramer, and i will see you tomorrow. stay connected to cramer on washington, wall street, worldwide. trust one man to bring you the most important stories of the day. his way. >> slightly different point of view about life, liberty and the pursuit of happiness. >> "the kudlow report," cnbc next.


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