Wednesday, 06/25/08
Posted 06/25/08,  11:20 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Wednesday, 06/25/08

  Dow Jones: 11,811    + 4
  NASDAQ:   2,401   + 32
  S&P 500:   1,321    + 7
 
 
 
 
 
First Segment
 
Opening Segment 1 Title: 'Tree Hugging'

.  .  .  .  .

Featured Stock(s): FMC Technologies, Inc. (FTI)

See FTI's official website here.

See the Yahoo! Finance profile for FTI here.



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

        
JJC:    Complete comments to be posted prior to the market open Thursday morning.

.  .  .  .  .

First, the Federal Reserve did nothing today... so, unlike everyone else, I'll spend no time talking about it... because it makes us no money, Mad or otherwise...

Instead, I am going back to the well!...

That's why I say, loud and clear, one on one...

Cramer to Congress!... Let me people drill!...

All week, I have been making the argument that there's no reason for Congress to uphold its moratorium on offshore drilling... Why?... Because we have the technology... the clean drilling and producing technology... that will allow us to look for new oil and produce it, without causing much damage to the environment, if at all...

Now, the oil spill that shut everything down... the so-called "Three Mile Island" of offshore drilling happened off the coast of Santa Barbara in 1969... but, you know, back then, they didn't have the technology for clean production that we have now... the technology that I believe makes this entire offshore drilling debate not a debate... It's moot.

So, while I usually tell you to wait to buy, buy, buy... I am waiving my five-day rule... and I want you to take advantage of the lower stock prices you see right now on your screen. You see, the market is hating oil right now - as it does periodically - this time, because this week's domestic inventories are bulging... When they're bulging in communist China, then I'll flinch... but not until then.

Now, I think you're getting a nice opportunity for once to buy, maybe even without the Cramer effect, some fabulous stocks that are on sale... and I say Hallelujah...

We talked about seismic imaging technology on Monday... OII... That was just slammed today. We talked about CGV and we talked about OII... that's the remote-operated vehicles thing... And, today, I'm adding another piece of the clean offshore drilling and production puzzle... and that piece is subsea infrastructure...

Specifically, what they used to call XMas Trees, and what they now call Subsea Trees...

This subsea technology makes drilling and production on the ocean floors safer and less dirty... It works like this... You stick a wellhead on the ocean floor to drill, and then you start drilling and, once the drilling is finished, you cap it with a subsea tree... and that tree then connects to a production platform, which eventually gets the oil or gas to land...

The first subsea tree was installed in 1961... but the technology has changed dramatically since then...

These subsea trees are used to control the flow of oil and gas, as well as injection of other fluids... something an operator can do remotely... which helps prevent spillage... like what we saw off the Golden State's (California's) coast in 1969.

We now use multiple subsea trees, and connect them to a single manifold, which means fewer rigs on the surface of the water... so, memo to Governor John Corzine, it's not going to wreck the whole New Jersey coast... just my house in front of Ocean Grove... and fewer umbilicals that can be severed and cause spillage.

I believe subsea trees are the safer, cleaner alternative...

Next time the principle opponent of drilling, Speaker of the House, Nancy Pelosi, reiterates here desire to depend on oil from the Middle East, rather than her native state of California, I'm going to tell her to climb a tree... or, at least, hug a tree...

Subsea trees are also the most profitable alternative. They let oil companies cut costs by requiring fewer production platforms, and they work in very deep-water areas where human involvement is frankly impractible.

Now, how about a play on these XMas trees?...

The play...

FMC Technologies, Inc. (FTI).

Okay... It's a long-time Cramer favorite... It seems, by far, the best levered to this subsea tree technology...

.  .  .  .  .

Now, I recommended this one earlier in the year, on January 9th... It was at $61.26. Now, it's at $77 and change, giving you a 26% gain... during a whole period where the S&P has just been a house of pain. I don't care if you may have heard about it before on Mad Money... I figure, after I've recommended it 18 times, finally, someone will listen to me...

FTI is the market leader in subsea trees. Of all the trees installed in the last four years, 42% of them - nearly double the share of the next-closest competitor...

The company is more focused on the higher end of the market, and it's also raising capacity to 335 trees a year, to take advantage of increased demand. I regard these guys as the orchard of trees... No, they're a veritable forest!

Remember that word visibility?... the ability to see how much money a company will earn in the distant future, which tech companies used to have?... Well, FTI has it. Over the next 15 months, they're expected to be awarded two contracts for 219 trees, as part of 12 projects, each worth over $150 million... meaning at least $1.8 billion in work... The company has a $5 billion backlog. They've got future business galore. I'm not even counting Petroleo Brasileiro (PBR)... which hasn't even started putting in its big orders yet.

Around half of FTI's tech sales are related to subsea... It could be incredible potential sales growth in this area. Business has grown at a 29% clip since 2002. That's Google (GOOG)-like...

Over the next five years, FTI expects... get this... subsea tree growth of 62%... That's twice Google-like...

Now FTI is still working on its spinoff of its legacy airport and food businesses. It can't lose them fast enough. Remember, FMC stands for when it was, earlier in its career, "Food Machinery Corp."... Can you believe it?... It's slated for the middle of the year, which we're at, so I think this selloff's going to happen very soon. I think the company gets about $200 million from it, but they'll probably use that to buy back stock.

If that comes through, and then you use roughly the 12 million shares left in the repurchase authorization, you've got a company that can buy back 10% of its shares outstanding... That would be a mega buyback, very pro-shareholder, and we love it.

You know, the tech companies do nothing but issue stock. My "new tech" companies do nothing but buy back stock...

FTI trades at just 20.7x earnings. It's got 27.5% long-term growth rate. Remember, what we look at is the growth rate versus the price-to-earnings multiple. This is really cheap in my book... particularly since your entry point now is five points lower than it was just two days ago, when people liked oil. Remember, now they hate it and now I'm telling you to buy...

.  .  .  .  .

The Bottom Line!:      Subsea trees greatly reduce spills, and make oil producers more productive...  It's the key to our drilling off both coasts...  Someone wake up Congress.  I think FMC Technologies, Inc. (FTI) is a great business.  I think this business is dominated by this company... and I am blessing, for once, buying it tomorrow, rather than waiting five days, because these stocks are for sale.

.  .  .  .  .

 

   
 

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)


FTI

77.21

79.34

FMC Technologies, Inc. (FTI)


 

 



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



Most popular
investing books ordered:
(click any book to see at Amazon.com)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 


 

 


We need your help!
If you find our service valuable, your donation is critically helpful to support
our operating costs and is MUCH appreciated!
(click below to donate)

We are serving thousands of new visitors every day and our costs are growing as well.  Thank you for your support & generosity!


 


 
 

 

 

 
 
 
 

Mutual-Fund-Holdings.com
NEW RESOURCE!  See Ken Heebner's CGM Focus Fund
Top 25 holdings - The No. 3 Top-Performing Mutual Fund in 2007