Monday, 05/19/08
Posted 05/19/08,  9:01 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Monday, 05/19/08

  Dow Jones: 13,028  + 41
  NASDAQ:   2,516  -  12
  S&P 500:   1,426  +  1
 
 
 
 
 
First Segment
 
 
Opening Segment 1 Title: 'Bullet Points'

.  .  .  .  .

Featured Stock(s): Altria (MO*)
Freeport-McMoRan
(FCX*)
Foster Wheeler
(FWLT*)
Transocean Inc.
(RIG)
MedcoHealth Solutions Inc.
(MHS)



See Opening Segment 2, below...
 
After this segment, you can see Jim's Lightning Round picks here...

        
JJC:    Remember when the market was going to brutalize anyone who came near it?... Way back... way back on November 8th... That's when I created a Kevlar portfolio for you... Of course, nonsensically at the time, I called it my bulletproof portfolio... pretty bone-headed... as there's no such thing as a bulletproof stock or company... but there are companies with Kevlar... or, to simulate it further, Timex companies... that take a licking and keep on ticking...

I picked five stocks and called them bulletproof... so, of course, within a week, they were down 6% on average, compared to down 1.6% for the S&P 500... and I know that you probably gave up on me, and them. At the time, I felt like a complete idiot... I mean, I got more hate mail for these stocks, than for about anything I have ever done...

But the critics missed the point...

When you wear Kevlar, and you get shot, you do fall over. I mean, that's what had to happen to many of these stocks... They got hit, and then they fell hard. That first week, I felt dumb... I should have been aggressively telling you to buy for the simple reason that they'd get back up! That was the point!... that, when they'd get hit, they'd come back... Not like the financials, not like the retailers... those never come back.

You buy Kevlar stocks, when you get nicked... if you want a chance to make a fistful of dollars...

Because, in a month of those companies of Kevlar were up an average of 4%, with the S&P 500 up 2%... and now that we're slightly more than six months in, my Kevlar-coated stocks are up an average of 8.8%, with the S&P 500 down 3.3%... This is wide-out performance, okay...

I think it's time to declare victory, and ask if these stocks still have the Kevlar advantage of great fundamentals...

.  .  .  .  .

All right, first, there's Altria... The successful breakup into domestic and international... That's Altria (MO*) and Philip Morris International (PM*)... This one's already yielding early positive returns. Together, the two stocks are up 4.7%, since I created the Kevlar portfolio... The domestic business turned out to be totally insensitive to the economy so far, because the 5% yield on MO* has kept the stock from going down, and the company managed to raise the price of Marlboros, and didn't take a hit...

The international business has been one of the biggest beneficiaries of the weak dollar, and it looks like it still has great growth trends... I gave this stock my highest endorsement. I bought some more of it for my charitable trust, after the spinoff... right about the time when a lot of people sent me a lot of hate mail, saying that one wasn't doing anything... The lack of patience that people have with these Kevlar stocks is remarkable...

My next Kevlar stock was Freeport-McMoRan (FCX*)...

Remember, we called it the year of mining dangerously?... It's up 11.9%, since I created the Kevlar portfolio. The story here is short and sweet... This is the best copper story in the world. Copper is in short supply. There haven't been any new discoveries. Endless labor problems in Chile have helped keep the price of copper high... and, I've got to tell you, those labor problems never seem to be going away...

The huge earthquake in China, and the need for a subsequent rebuild, has boosted FCX*'s business... If the U.S. housing market ever returns to health, I mean, this one's going to go through the roof! I anticipated that housing would be bad, but I believed that FCX* would have Kevlar anyway... Here's another stock that I bought more of - when it got hammered - my charitable trust...

Still one more...

Foster Wheeler (FWLT*)... Okay, maybe a little disappointing... down 1%...

This is one that is a key part of the Kevlar portfolio, because it's still my favorite infrastructure stock, even after the ramp that it has had... It's levered to higher energy prices worldwide... very little to do with municipalities, which has been the kiss of death for infrastructure...

This one survived the big dip that apparently turned out to be a completely false read of FWLT*'s health... But the company assured us on Mad Money, going so far as to visit in person, and gave us the confidence we needed... Ray Milkovich (CEO) came on... I bought more FWLT* when it dipped, because the dip was for no reason... It doesn't matter... It had Kevlar...

Transocean Inc. (RIG)... I mean, this one is monster... It is up 27.6%, since I invited it to the Kevlar club... The largest, best deep-water contract driller in the world. When I said RIG was bulletproof, I was talking about its earnings visibility... meaning how accurately you can predict what your company will earn in years and years and years... well, let's just say, usually 3-5 (years out)...

Now, if you've got visibility, you're generally less dependent on the vicissitudes of the current economy, and that's precisely what RIG is seeing through 2012...

You see, Brazil wants 80% of the biggest rigs for the biggest oil find in 30 years in the entire world... and all the rigs it needs are deep-water... I think that means, now, that RIG will have orders through 2015...

I did sell this Kevlar-coated stock for the trust... But that's because I had a double... I was feeling really greedy... Remember what we always say in Cramerica... Bulls make money, bears make money, and hogs get slaughtered. I had been a hog. Still... I wish I hadn't done it... The stock went much higher...

And, finally... controversially... MedcoHealth Solutions Inc. (MHS)... the only company in Kevlar that fits the traditional idea of a defensive stock, like drugs and foods... the ones that were meant to be Kevlar-coated, but I told you weren't anymore, because of raw costs...

You're supposed to buy stocks like MHS. Those were old defense stocks. They're not working... I mean, you can take a look... MHS did nothing... it did nothing, okay... MHS was the only company in the Kevlar list that I created that really doesn't make money, if the economy... it doesn't matter how strong the economy is...

MHS makes its biggest money as drugs come off patent... and it gets better margins when it sells generics.

But, unlike RIG, MHS has been hurt... because its visibility only goes out as far as 2012, which is when a lot of the good drugs go off patent. After that, there aren't that many drugs expected to go off patent, and there's more competition than I thought to MHS.

The other four Kevlar stocks really don't have a lot of competition...

I mean, think about it...

Altria (MO*) is pants-ing all the competition... We saw a good research report our Friday, talking about market share...

Freeport-McMoRan (FCX*)? I don't know... there's really no American competition for copper...

Foster Wheeler (FWLT*)? No one is really in these things, other than Fluor (FLR), and you know how high that went...

Transocean Inc. (RIG)? The only other guy that really competed against them was GlobalSantaFe, and RIG bought them...

MedcoHealth Solutions Inc. (MHS)... There's a bunch of companies in there. Should it have been in the Kevlar portfolio? I think that what happened there, is that I felt like I had to have one traditional defensive, and that turned out to be wrong. I'm hesitant to keep calling MHS a company in Kevlar... I think, if it rallies, I'd sell it...

.  .  .  .  .

The Bottom Line!:      The Kevlar portfolio worked!  It's up almost 9%, while the S&P 500 is down 3.3%.  Some of these stocks got knocked down, but I want you to think about the mammoth no-name the next time that happens, okay...  they get up again.  And that's why we like Kevlar stocks.  They have big themes that mean, like Clint - like the man with no name - they have the capacity to recover... even if any of the bad guys shoots them.

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


MO*

22.56

na

Altria (MO*)



FCX*

124.83

na

Freeport-McMoRan (FCX*)



FWLT*

76.81

na

Foster Wheeler (FWLT*)



RIG

161.39

na

Transocean Inc. (RIG)



MHS

48.74

na

MedcoHealth Solutions Inc. (MHS)


         
 

 

 



See all of tonight's stocks' latest quotes on Yahoo! Finance



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Second Segment
 
 
Opening Segment 2 Title: 'Wind Wind Situation'

.  .  .  .  .

Featured Stock(s): Thomas & Betts Corp. (TNB)

See TNB's official website here.

See the Yahoo! Finance profile for TNB here.

 
After this segment, you can see Jim's Lightning Round picks here...


JJC:    In the old days, technology companies used to be run by engineers... guys who would profit by solving the most important problems of the day... Now, most of what we consider tech is about designing dazzling video games... or creating software that makes employees into more productive salespeople...

As far as I'm concerned, that's not tech anymore... it's entertainment and marketing, that happens to use technology. No wonder the "old tech" stocks have low multiples and little upside...

We're moving on, because we've found the "new tech" stocks... a group I'm going to be talking about ad naseum, until the market finally picks up on how great this theme is, and sends my "new tech" stocks up much higher.

We were early on Mad Money on the agriculture stocks... early on the rail stocks... early on the infrastructure stocks... and now we're early on "new tech"... and, of course, we're early on wind...

I've got a stock that combines both...

.  .  .  .  .

Now, "new tech" companies... usually dirty, industrial, smokestack stocks are using their engineering know-how to create products that reduce carbon emissions, reduce power consumption, create renewable fuels, like wind, and basically are really innovating... not just coming out with sequel after sequel of Grand Theft Auto... or the fourth version of Motorola's razor (cell phone)...

Tonight, I want to introduce you to my good friend, Thomas & Betts Corp. (TNB)...

This is another "new tech" stock that really fits the mold...

Most of TNB's business comes from its electrical division, where it makes all kinds of electrical connectors... floor boxes, fastening products, REF connectors, enclosures... The point is, TNB supplies over 70% of the items used in a typical electrical application - it could be commercial, industrial, residential construction... Although, only less than 15% is residential...

They make what the growing economy needs, simply to keep industrializing, not to mention to provide, regulate and optimize power consumption... With oil at $125, optimizing power consumption is probably the most important thing we can do on earth...

The electrical business is 80% of TNB's sales... I'm okay with it.

.  .  .  .  .

It's got heating, ventilation, air conditioning (i.e., HVAC) businesses, where they make industrial-sized heaters, furnaces, and evaporators. I can tell... I know what you're doing... you're asleep... All right, well let me charge you up here...

TNB is a stealth play on my favorite theme... on wind power...

That's right... 10% of this company's business is in making steel structures... and, guess what? Along with tubular and lattice transmission and distribution poles, TNB makes wind towers.

I know that wind is a small part of this company right now, but wind was a small part of Trinity Industries Inc. (TRN), the railcar maker, when it gave the company that gorgeous upside surprise... Wind was a small part of Owens Corning (OC), before it blossomed... Wind was a small part of Otter Tail Corp. (OTTR), but it's getting bigger...

Everything that wind touches is getting bigger. There is no company that is a pure play, other than a couple that I will reveal later this week, and they're not necessarily for consumption... because, either they're too small, or because they're foreign...

TNB seems to be doing nothing to promote this particular part of their business, or talk about it with investors... which is why I'm mentioning it to you... I went all through its website. They just don't talk about it. But wind's growing so fast, and the distribution pole business is so important to wind's integration into the grid, that I'm surprised that TNB doesn't talk about it.

.  .  .  .  .

This "new tech" play seems to be trying to turn itself around too...

The chairman and CEO, Dominic Pileggi, has been selling off unprofitable business lines, and focusing on taking back market share that TNB had lost... and unprofitable business - as they get sold off - you will see more of its success in wind... which, by the way, the Department of Energy said last week, will be supplying 30% of our energy needs by mid-century...

Now, this stock has sold off, since it reported a not-so-great quarter on April 30th... But some of that was because TNB's guidance was fuzzy... They said that the rest of the year is going to be back-end loaded... meaning the missing earnings from this quarter will show up positively, I think, as soon as this quarter...

Now, TNB's management did say, after all, that they expect a pickup in the volume in the second half of the year. TNB is becoming a better ROW-er... 40% of sales coming from overseas in the most recent quarter... 34% last year. So we see the progression. The rest of the world is really driving this one's growth, with Canada providing 26%, Europe 46%, and others growing at 43%.

The company also has a stake worth $6 to $8 per share in Leviton, a privately-held electrical energy management and lighting controls business... Plus, there's the 2.8 million share buyback, worth roughly 4% of shares outstanding.

.  .  .  .  .

The Bottom Line!:      At 10x earnings, Thomas & Betts Corp. (TNB) looks incredibly cheap to me.  And that's without even taking into account the totally ignored wind business, which will soon assert itself, making this a wind play, with a strong electrical franchise.  Just like Owens Corning (OC) was an insulation play, that turned out to be a wind play... and Trinity (TRN) was a railcar business, that turned out to be a wind tower play...

 

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


TNB

41.88

na

Thomas & Betts Corp. (TNB)

         

 

 

Go to the LIGHTNING ROUND from tonight's show here >>

See current quotes on Yahoo! Finance from tonight's show stocks here >>

Symbol keys:

A Charitable Trust stock. - An asterisk next to a stock symbol indicates that Jim mentioned it is a stock that he manages within
his charitable trust portfolio.  You can see the complete portfolio
of stocks here >>

Thumbs up - indicates he would buy the stock or, at the very least, not sell the stock.  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Thumbs down - indicates he has said not to buy or to sell the stock, based on his comments  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Back up the truck - indicated by Jim, when he says the stock is so good, that he would do a 'mon-back' on the stock... In other words, this is the sound someone would say to a truck driver, "Come on back... " as he is "backing up the truck" to load up on his cargo.  Translation for buying stocks:  This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.

Stumped. - Of the 2,000+ stocks that Jim Cramer has in his head, for which he has an informed opinion, he sometimes comes across a caller with a stock he does not know well enough to opine on...  He then indicates he is stumped and will have to come back to it, after he does some homework of his own on the stock.  This usually occurs during the Lightning Round, when Jim does not know in advance who is calling, or what their stock question is about.
 

 
Definitions of key phrases used by Jim, known as "Cramerisms":

Definition:   'Pull the trigger' is Jim's phrase for making the decision at that point to trade - either to 'buy' or to 'sell' (although he usually uses the phrase for buying), as if to say you should feel comfortable enough to make the final decision without looking back...

Definition:   'Ring the Register' is Jim's phrase for selling a stock, and making it a final sale, that you should not look back on.  Put it behind you.

Definition:  'Let It Come In' indicates how you may wait for it to pull back, or have the stock price come down briefly, as your chance (after letting it come in) to buy the rest of your position (i.e., total number of shares you own in that stock).

Definition:  'backing it up' or 'doing a 'mon-back' is Jim's phrase for the metaphor of backing up a truck to load up on a stock by buying it.  'Mon-back is short for the imaginary worker saying, 'Come on back...' as the truck is backing up to receive its load... Notice that we use the little truck icon to indicate where Jim has mentioned this.  Translation for buying stocks:  This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.
  See more "Cramerisms" & other financial phrases here >>
   
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