Friday, 06/20/08
Posted 06/21/08,  09:51 am ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Friday, 06/20/08

  Dow Jones: 11,842  - 220
  NASDAQ:   2,406   - 55
  S&P 500:   1,317   - 24
 
 
 
 
 
First Segment
 
Opening Segment 1 Title: 'Gardner Variety'

.  .  .  .  .

Featured Stock(s): Gardner Denver Inc. (GDI)

See GDI's official website here.

See the Yahoo! Finance profile for GDI here.



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

        
JJC:    Another ugly, completely hideous day... led down by all the stuff we hate in Cramerica...  the banks, the retailers, and of course, the automakers... Sell, sell, sell!...

If you own any of them, well you're obviously like the Gollum... I'm not listening, I'm not listening... you're not listening to the show. And you are taking the full front of a down-220 day...

Oh, and by the way, my forecast for you next week if you persist in owning this nonsense, is to quote the greatest stock guru of all time... to quote Mr. T, my forecast is "Pain!"...

.  .  .  .  .

All right look, my job is to keep you in the game... And this is, even after a day like today, the greatest game ever invented to make money.  And I need you to recognize that I can't keep you in the game if you persist in bottom fishing in those toxic banking rivers, in the toxic housing rivers, and of course, anything auto, and auto related.  See, in Cramerica, we are believers in the same long term theses we have propounded since the show began... If you don't know them, go get the darn book... Agriculture, minerals, mining, aerospace and defense, infrastructure, and by far, most importantly, the petroleum complex that includes natural gas... this is the year of natural gas... crude oil, and everything needed to bring crude oil and natural gas products out of the ground and into the gas pumps, and the powerplants that use them.  Today was no different.

Those stocks were the only green in the sea of red.  Yet, we still have non-believers, people adverse to buying into these trends.  So we are going right back into the well, so to speak, to recommend a stock that not only survived, but thrived today's onslaught and I think will continue to do so, and that stock is...

Gardner Denver Inc. (GDI)...  No, not Bob Denver, for heavens' sakes...

.  .  .  .  .

GDI, which makes key parts for getting at energy and getting it shipped to where it is needed, is not a new stock on Mad Money.  I recommended it on September 26th at $36.60... And it's up 46% since then, so I've got some street cred here...  But it has, and I'm going to explain this in a moment, it has only gotten cheaper because while up 62% year over year, is still way behind where I expected it to be by year end, because its earnings are on a tier, just a tier...  And what happens by the way, when earnings go up?...  Stocks follow...

And this one has not kept up pace with earnings.  What's GDI do?  It's all about that stuff that I'm telling you is right... but you don't want to hear about, because you're too worried about why they're in networks, and worried about customer retention software...

GDI is making the important products, compressors, blowers, industrial vacuum pumps, fluid transfer products...   Remember fluid, as soon as you hear that, listen up.   Fluid control may not be sexy, but it's been rocking with the flow serve at 133, just 7 points off the tide... Robbins & Myers Inc. (RBN), at $41 and change, 3 points off its high... And Cramer-fave, Colfax (CFX), which is just 2 points away from its high of $23 and change, and up 12%, by the way, since I recommended it on May 12th...

Why do I point these out?  Because where are your bank stocks?... Down 40, 50, 60, 80. Where's your Ambac (ABK)s?  Your MBIA (MBI)'s, down 90.  Your housing stocks, HGX, down $60... $70...?  No, we buy stocks that are working on Mad Money.

.  .  .  .  .

The key to GDI's success, and the reason why it's not just an oil play, but a "new tech" stock, is that it builds proprietary technology into all this "nuts and bolts" equipment...  So you need compressors, blowers, industrial vacuum pumps, transportation, loading equipment and water jetting systems...  All the things that GDI quietly makes that move things and create the energy that you use. If you want to extract oil, so even though this company gets only 23% of its sales from energy, meaning oil, and gas...  It should go higher when oil goes higher, as it did today.

Now I think it means you now have a chance to buy GDI up slightly today, was not up enough.  Why?... Because it's not just making compressors and vacuum pumps and fluid transfer systems, it's making better compressors, better pumps and better fluid transfer systems that are designed to be smaller, more effective and more energy efficient.  That's the definition of a new tech stock.  Why, while old tech companies design video games that require larger and larger pieces of equipment and better chips to play, I think Rock Band, and consume, ever more energy...  And by the way, I'm actually being kind to Silicon Valley, here, by not focusing on any of the other zillion games that teach your kids how to kill people.  GDI is just the opposite, even though it's not exciting. Now, you know, my most boring stocks are my best picks, okay.  Plain and simple.  GDI's proprietary technology is designed to help solve the big problems of mankind, not the little problems of trying to keep our kids interested and staying alert in front of a screen. 

.  .  .  .  .

Let me give you an example...

GDI just introduced a new stainless steel pump that is specifically designed for the transfer of food grade products from tank trailers...  I know, but listen... remember, food... stopping famine... is one of those top ten needs of humanity that new tech solves.  GDI's pump has a new design that allows for easier cleaning and maintenance...  So you should be thinking less spoilage, smoother operations, less contamination of food, not to mention faster transfer from food from the tank trailers to wherever it's going.  What does this mean?  It means more food is saved at less cost. It is just a huge issue, and GDI is trying to solve it.

You want another example?...  GDI is shrinking the size and increasing the efficiency of a whole host of industrial products it designs.  A smaller size for the blowers, for example, minimizes leaks, increases efficiency, ideal for applications like now... it sounds boring but let me give you what it's for...  for something that's going to be worth a lot of money with oil at $130 and change...  fuel cells.  Yeah, sound like "new tech" to you?...  Fuel cells.  Air samplers... they make cleaner air and gas boosting energy.  Again, getting more out of the energy we have.

.  .  .  .  .

By the way, I should take a moment to mention again, that this is Cramer's year of natural gas, and companies like GDI that make gas boosting equipment... this is equipment that compensates for any loss of pressure inside of a gas pipeline, should thrive...  Natural gas stocks, were up in the down-220 day.   GDI has the number two market share positions in most of its markets.  It generates 59% of its sales, not in the United States, in the rest of the world... we know the rest of the world is doing a much better than we are, and its results have been fabulous. When it reported on April 3rd, it did one of those things called a beat and raise, one of our favorite moves on Mad Money... you know, you'll be listening to Joe Kernan in the morning, and he'll say well, GDI beat by United States Steel (X), and then you say, ooh, why didn't I have that.

Okay, this one beat, bringing in earnings per share of 95 cents, 15 cents better than the consensus estimate, when it happened, it was all the talk of the morning, and you didn't own it.  Right now, GDI is trading at 13x a $4 forward estimate...  I think that estimate is 50 cents too low, and the multiple itself is too low, given its peer group, which is two to three multiple points higher.  Remember, you times the earnings, times the multiple to get the price.  Simple equation, e times m equals p, okay... And I say the earnings estimates are too low and the multiples are too low.

.  .  .  .  .

Why don't we give it the peer group multiple?...  Give it like all the other oil drilling and the Schlumberger (SLB)s, the Halliburton (HAL)s, the Nabors (NBR), the FMC Corp. (FMC), you know what you get?...  A $65 stock...  a 21% gain from here, and believe me, I am being conservative, I am being conservative...

I should also mention, that GDI is a believer in its own stock.  They've got an aggressive buyback...  Sir Mix A lot, again, I like big buy backs and I can not lie... They bought back 1.2 million shares in the first quarter... sounds a little bit low, right?  1.5 million shares left in the buyback, but this is shareholder-friendly...  There are only 52 million shares outstanding, and it doesn't take a lot to move it.   So I know it may not be interesting, but think about all the stocks I've been mentioning that are not interesting, what do they have in common?...

They tend to go up...

.  .  .  .  .

The Bottom Line!:      For a "new tech" play with great oil and gas exposure, I recommend you look no farther than Gardner Denver Inc. (GDI)... a stock, that was up in the midst of the tsunami of pain today, and a stock that I expect to hit the mid-$60s... 14, 15 points higher, maybe... just by year end.

.  .  .  .  .

 

   
 

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)


GDI

53.73

55.80

Gardner Denver Inc. (GDI)

Price target:  Mid $60s by year end.


 

 



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



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Second Segment
 
Opening Segment 2 Title: Speculation Friday Pick:

'Dirt Rich'

.  .  .  .  .

Featured Stock(s): Oilsands Quest, Inc. (BQI)

See BQI's official website here.

See the Yahoo! Finance profile for BQI here.

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

 

JJC:    How about I give you a little real estate buy?... Oil real estate, that is...

I'm talking about Oilsands Quest, Inc. (BQI). Not to be confused with a tribe called Quest... 

BQI is a development company that controls 500,000 acres of land in Saskatchewan. Yes, Saskatchewan oil sands, right across the Canadian provincial border, from the much better known Alberta oil sands.   Development, speaking of Speculation Friday, is code for has no revenues...

BQI is a bitumen play, which is really dirty oil that's in sand, okay.  One that costs about $40 to refine... that's a fortune.  Now when oil was in the $40s, it was too risky to sink all that money into oil sands, with a very speculative, maybe no return... that oil would go much higher. But with oil now three times that, the economics of bitumen, also known as oil sands, is much more compelling. 

.  .  .  .  .

Now before we go into what that could mean to BQI, let's go over some caveats...

First, this is an under-$6 stock, and while that may be perfect for the CNBC million dollar stock game, it might be too risky even for your Mad Money portfolio, unless you do homework and get comfortable.

You absolutely cannot buy this stock in anything but small increments... and you must use limit orders, or I promise you, you'll be robbed blind... I'm going to guarantee it.

Now, I got this stock from TheStreet.com's stocks under-$10 newsletter... and decided to run with it because, if oil spikes next week, after the Saudis failed to raise their production by enough to stem the futures... then CNBC homegamers might have a real winner here.

With those warnings in mind, BQI could very well be sitting on 10 billion barrels of bitumen. It's only had one discovery so far at Axe Lake, which lies only about 5%... only about 5% of the acreage it controls... and it's expected to have about 1.4 to 1.5 billion barrels of bitumen...   Remember, bitumen again, is dirty, dirty, Oilsands oil... It isn't like light, sweet, crude...  It costs a lot of money to turn it to oil you can use. 

The company is looking for joint venture partners to help it explore, and we should get an announcement on this sometime this year. Now, I think the announcement will be a positive catalyst for the stock.

.  .  .  .  .

Now, here are some negatives...

It's done a slew of stock offerings...  We don't like those...  And the most recent one was on May 12th, a private placement with Sprout Asset Management, and some other private investors, at $4.20.

.  .  .  .  .


Remember, the company has no revenues...  There hasn't even been one external study of Axe Lake, their one find...  Although there is a study expected at the end of the year.  I still think BQI could work out, if the oil is there... Or, like I said before, in might work out, even if they never even get to finding more oil...  Because right now, I view this one as a real estate play...  Ivanhoe Energy (IVAN), not a Cramer-fave... we've knocked this company many times, but still a good benchmark of Canadian oil fever... recently bought some leases in the Alberta oil sands, right across the border, at a cost of $2.8 million per square mile.  All right, let's do a little arithmetic here... BQI has landholdings of 1200 square miles.  So, if you use the same price, then the company should be worth $3.4 billion, which is about three times BQI's current $1.2 billion enterprise value.  That backs out to a stock price of $16.  That's 156% higher than BQI's current price.  Did I say the stock would go up by 156%?  No. But, given the price Ivanhoe paid for that Alberta land, it's not beyond the realm of possibility.

Even if we give BQI's assets a 50% haircut, because they're in Saskatchewan and not Alberta, that still works out to an $8.34 stock, up 34% from the current price, based on IVAN's deal numbers.

Again, if you pay up a dollar, you're going to wreck the whole rate of return that you might get, if it goes to $8...

And the only thing that's happening now, by the way, is that I'm talking about it.  There's no news next week, alright... no news...  Wait five days.

.  .  .  .  .


Now who even cares if these guys find oil anytime soon?...  I bet an acquirer looking for more acreage to explore, in order to find more oil, would love to swoop this one up.  It would be a great acquisition for an oil sands wildcatter.  Forget joint ventures.  I think this company could very well be bought just for the land its sitting on. 

But don't forget all the risks... This one is still speculation, pure and simple...  which is why we save it for Friday, so you have all weekend to cool off and not pay up and not get too excited.

Here's the bottom line.

.  .  .  .  .

The Bottom Line!:     
For a risky play on oil sands real estate, we like Oilsands Quest, Inc. (BQI)...

.  .  .  .  .

 

   
 

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)


BQI

6.24

6.70

Oilsands Quest, Inc. (BQI)

 

 

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
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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.
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