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Wednesday, 06/25/08
Posted 06/25/08, 11:20
pm ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Wednesday, 06/25/08 |
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Dow Jones: |
11,811 |
+ 4 |
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NASDAQ: |
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2,401 |
+ 32 |
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S&P 500: |
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1,321 |
+ 7 |
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Opening Segment 1
Title: |
'Tree
Hugging' |
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. . . .
. |
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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...
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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.
. . . .
.
| |
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
■ |
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|
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)
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See all of tonight's stocks'
latest quotes on
Yahoo! Finance |
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Most popular
investing books ordered:
(click any book to see at
Amazon.com) |
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