After this segment, you
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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.
. . . .
.
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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
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this stock
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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
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truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
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Jim has mentioned this.
Translation for buying
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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
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