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tv   Mad Money  CNBC  April 1, 2013 11:00pm-12:00am EDT

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i'm jim cramer, and welcome to my world. >> you need to get in the game! >> firms are going to go out of business, and he's nuts! they're nuts! they know nothing! >> i always like to say there's a bull market somewhere. >> "mad money." you can't afford to miss it. >> hey, i'm cramer! welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you a little money. my job is not just to entertain but i'm trying to teach and coach. so call me. 1-800-743-cnbc. april's not a cruel month. in fact, it's the most bountiful month of all 12! ♪ hallelujah plus, when you look at the other
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years when we came out in the first quarter with a full head of steam every year, that's right, every year we finished up by the end. so what was with all the gloom today? did you see it like i did? i mean, what was that? >> the house of pain. >> s&p backsliding .54%. nasdaq down -- i'm sorry, .45%. nasdaq nose diving .87%. that was a downer. dow fell only six points but that was aided by a last-second gain in united health on news of a positive change in medicare reimbursement rules. most of the day, though, it felt like a hangover that no one wanted to get over. from around the first quarter. felt like the doubters were out in full force today. everything from getting the jump on the sell in may crowd. [ booing ] to worries about when europe opens because remember, it was closed. to qualms about the cold weather in march and how it upset the retail trade.
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you know what? all that stuff, that's just one more reason for you to focus on individual stocks and what the companies behind them are doing to bring out value irrespective of these big macro concerns. now, near the end of last year i put together a list of ten companies i told you that i felt were seriously undervalued versus the market, and i said these companies are companies that shouldn't just be standing there, they should be doing something! they weren't selling in may and going away stocks! they weren't stocks that hung on every word about europe like the cyprus thing. no! they wouldn't be dinged by dirty russian money caught up in the spin cycle without a chance to be laundered even or folded and put on hangers. these were stocks that didn't need the chinese housing market to stay alive with pleasure. they didn't even get affected if the bubble's pricked over there.
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they weren't going to be quarantined or sequestered or whatever it is that's supposed to hurt yosemite sam and close jellystone national park. isn't that stephen king's new book, "the sequester"? these stocks were on fire. with the first quarter in the bag we've got to review how they're doing because i think these are still some of the most fertile stocks out there. first in the aggregate, don't just stand there, do something cohort, spectacular performance. from november 29th when i started recommending them through the end of the first quarter, and i pounded these stocks almost every day during the first quarter. they have taken off like rockets at cape canaveral, wherever rich people are shooting off rockets these days. the don't just stand there mob is up 23.9% versus the s&p 500's 10.2%. wow. smoking. winner? hess. which just today announced the sale of its russian unit to lukoil for $2.05 billion. hess has been under siege since the beginning of the year and is now going to $73 and change from
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the $50 price tag where it was -- when i suggested that if hess didn't do something to bring out value someone else would. sure enough, a hedge fund outfit called elliott management has put intense pressure on hess to unlock its potential, and that's exactly what hess is doing. don't forget the company recently sold a small position in the eagle ford shale, remember that's the most bountiful shale in america, including the bakken. to sanchez sn, which is still stuck right where it was when the deal was done. that's stupid. i think sanchez is a -- >> buy buy buy. >> who's next? nobody believed that decker's could ever come back from the depths it had fallen going to the new year. plunged from $117 in 2011 all the way down to $38 at the time i added it into the don't just stand there mob. turns out that decker's had plenty of life left in it courtesy of a cold winter and a dramatic decline in the price of fleece. that's the key fluctuating ingredient. the stock went all the way to the 20s. but no one ever catches the bottom or the top.
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this stock has racked up a 45% gain since we said it shouldn't just stand there. but bizarrely, 30% of the stock's float remains short. people are still betting against this thing. i think a reinvigorated decker's has a lot of room to maneuver and if it doesn't i still believe it is a natural for vf corp. to take a run at this company. in order to bolster its reputation as a fixer-upper of older seemingly tired brands. just like it did successfully with timberland. manitowoc, that bizarre amalgam of food service equipment and cranes. rallying 33%. that might be enough to keep it out of harm's way of activist investors. i still believe the company could be on course to break itself up. that's when you -- what i said it could double. but in the interim when you check with the regional banks as we do all the time you do get the impression that commercial real estate construction is coming back, and that's right up manitowoc's alley. don't forget, there's about 15 different condominium buildings coming up in brooklyn alone. boy, the construction's on
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fire for 2014. mine safety appliance is up 29% since its incredibly boring no one cares about stock except for me, it was included on our list. and that's because of earnings. after painful adjustment from expansion to europe this company which is the premier independent safety appliance and power firm out there remains in the sights of the honeywell, of dupont, of 3m, all of which have expressed interest in the sector but not yet the company. i can't believe that dst, that's dog sam tom, hasn't separated itself into financial services that help brokerage houses with record keeping and a fast-growing record keeping company for life insurance annuity. as i said they should. and i said they should get rid of the rest of the real estate. that way they would be able to stay independent. how is it able to stay independent? perhaps because it's up 24% and then another 52-week high today. home and security. the company has not felt compelled to spin off its security and storage segment
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including master lock from its kitchen and bath unit. what a natural. it should be done. i think by year end they take a run at this company if only to have less exposure to the hobbled european market and fortune would be wise to break itself up before it gets swallowed up. i think they think the 22% is gain is enough. i think what we've seen so far is not enough. and i think the housing industry is on fire, there's more to run. here's the biggest blue chip around, and it's been a horse. i'm talking about j&j. johnson & johnson, up 18% since its selection. this company, which my charitable trust proudly owns, is still being cleaned up by its brand new ceo alex gorsky. so far all the big pharmas which have gone out of the way to create value, whether it's bristol myers or pfizer or schering-plough which sold itself to merck after cramer fave ceo and now author fred hassan decided there's no more value left to create. it's time for j&j to follow in the footsteps and split into the fast growing pharma business,
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the cash flow machine that is consumer products and the troubled but profitable medical device business. meanwhile, the company's still got that 3% yield, attractive alternative to bonds especially when you factor in the favorable tax treatment for dividends and the aaa balance sheet. if you told me that reliant tech, atk, the defense company, would be up at all considering the sequester, i would have been shocked. yes. like wichita. shocker. 16% gain. it's posted. it's completely remarkable. if you're a defense contractor, starved for growth, you can pick this stock up for a song. less than $3 billion. i think it's possible. now, we keep hearing cautionary comments about the numbers that bed bath & beyond will report. that's kept a lid on the stock. will the lid come off after urban outfitters reported good numbers after the close? no. i think this stock stays here if only for a matter of time before a private equity firm says all right, that's enough, let's just buy the darn thing. 9% doesn't take it out of the cross-of these aggressive buyout
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firms. they're always looking for something to do. finally, the one laggard in the group is amazingly a stock that we have just liked from when the show began. hain celestial. hain. hanes is doing better than hain. underwear's selling better than organic food! anyway, this one's flat since we included it in the don't just stand there cohort. the whole organic segment seems to be hostage to whole foods, which acts terribly, and the short sellers have been swarming endlessly around hain, a company ceo irwin simon built with a series of acquisitions. is it time to spin off the doubting non-food offerings? it's been enough of a laggard that i think something good could happen. here's the bottom line. these ten stocks have been on the move far more than the broader stock market. ever since we anointed them as companies that should unlock their hidden value. right now their strong performances kept the activists at bay except for hess even though they're all big in the market except for bed bath and hain. i think the outperformance is just beginning. these stocks are all still worth buying with maybe the exception of hess and the only reason i've
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cooled on hess is that with today's sale of its russian properties it definitely lessens the chance for an acquirer to come in and buy the whole darn thing. i want to go to brian in florida, please. brian. >> caller: cramer! >> yeah. >> caller: i love you! >> love you back! >> caller: all right. what about these electric cars? what about tesla motors? talk to me. >> all right. i'll talk to you. this fellow musk, he's arrogant as all get out, but i'm beginning to believe. tesla reported some numbers. i know it's only a few cars, but boy, they're really just -- they're clobbering the expectations. and meanwhile, the short sellers, tesla looks like the real deal. for now. don't just stand there, do something! the ten companies that were undervalued that didn't matter about europe, didn't matter about the s&p, didn't matter about the etfs, they're up with a vengeance. and you know what? i think they just started. "mad money" will be right back.
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>> coming up, healthy returns? all this week cramer's checking up on the strongest trends in medical science for companies in the fight against rare diseases. tonight, don't miss two stocks that could keep your portfolio in tiptop shape. and later, first of four? the first quarter's over, and it's been the best one for investors since 1998. cramer's looking through wall street's best and worst to find which stocks may be able to keep up their winning ways. plus, oil versus water. they're laying the groundwork for the next leg of this company's economic recovery, but which of these companies could engineer growth in your portfolio? don't miss this pipeline powered face-off. all coming up on "mad money." >> don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to or give us a
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all last week i talked to you about the past and future of the pharmaceutical industry. these days the stodgy old big pharma names, they're mostly places to put your money in if you happen to be looking for nice safe dividends. i call them fixed income equivalents. but back in the 1990s big pharma was synonymous with growth and these stocks traded at sky-high price to earnings multiples. and now i think there's a whole new generation of drug companies ready to take up the mantle, to become what big pharma was in the '90s, fast-paced growth stocks that seem downright unstoppable. they used to go up almost every single day. now, last week i highlighted the larger biotechs, celgene, gilead, biogen, and regeneron. last one a little controversial but i've got to tell you it's moving on up. i'm far from finished, though, exploring this theme. this week we're going to take a closer look at some relatively smaller drug stocks that, yes,
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are far more speculative but have some promising new drug pipelines and bright futures. for starters we have to talk about one of my favorite areas in all of pharma, the orphan drug space. if you're a biotech company you want to be developing orphan drugs, no doubt about it. for those who don't remember, what's an orphan? an orphan drug is one that treats an incredibly rare disease, not that many people have. how rare? in the united states it's a disease that afflicts less than 200,000 people, and in europe one that occurs in no more than .05% of the population. why such a smaller customer base? one reason is the fda tends to go much easier on orphan drugs because they know there aren't any other alternatives for people with these rare diseases. second, once orphan drugs get approved, the companies that make them are allowed to price these medications truly at astronomical levels. we're talking drugs that can cost hundreds of thousands of dollars a year.
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because again, the people with these rare diseases don't have any other choice and they cost the system, the health care system -- a lot of times their treatment involves hundreds of thousands of dollars of care from one of these hmos. so they actually are, believe it or not, a bargain. meanwhile, the government provides orphan drug developers with all sorts of incentives because otherwise no drug companies would even bother to treat these diseases. you end up with tax incentives, enhanced patent protection, clinical research, years of marketing exclusivity. in short, orphan drugs are the sweet spot of the industry. but if all that isn't enough to convince you, how about we consider my two favorite orphan drugs at the moment? alexion and biomarin. i first recommended these names about 2 1/2 years ago, in october of 2010, and since then alexion has rallied an astounding 183%. biomarin has rallied 181%. these are fantastic moves. we liked orphan drugs almost since the show began. i think these two stocks, believe it or not, even after
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these runs, have a lot more room to go higher. so let's start with alexion, alxn. that's an $18 billion company, $95 stock. right now alexion has just one drug on the market and i know that's going to freak you out. but listen to me. solaris is a blockbuster. okay? this is an orphan drug that used to treat several ultra rare blood conditions. known as pnh, paul nancy harry, which when left untreated can lead to anemia, clotting, and death. that's why solaris is among the most expensive drugs on the market with a price point that's, don't blanch, about $500,000 a year. if you have this disease, you need to keep taking the drugs for the rest of your life. plus solaris has multiple indications, something else we love when it comes to drug company products. in 2011 it treated a rare but deadly kidney disease driven by genetic mutations. and the opportunity for this disease is at least as big as the complex of blood diseases solaris was initially approved for.
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it expects to generate an astounding $1.5 billion in sales. that is up 33% from last year. that's amazing growth. and this is still a growing franchise. it's been on the market for pnh the blood disorder since 2007. so the growth in europe and the united states could be slowing on that front, but there's still plenty of upside coming from the rest world, places like turkey, brazil, russia, korea. and for the second indication, the rare kidney disease, soliris was only launched to treat that one 18 months ago in the u.s. and the european launch is coming in the second half of this year. so just when these two indications, this drug should continue to fuel alexion's rapid growth for as far as the eye can see. plus the company's testing solaris for a host of other rare conditions. we could start seeing results in some of these studies sometime this year. and alexion is expected to file for approval to use solaris for another type of kidney dysfunction in the near future. could add $2.35 billion in sales to the drug's peak. in short, alexion is an entire pipeline in this one amazing drug. and beyond solaris alexion also
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has a treatment for rare, sometimes fatal metabolic bone disease. that's in phase 2 trials right now. that's in the out years. but you know what? the thing i most like about this stock, it sold off more than 19 points from its high of last autumn. two main reasons for this pullback. back in october the company reported a quarter many people viewed as disappointing because solaris sales were in line with the street's estimates rather than beating them. however, i think this is a case where the analysts got too aggressive and didn't model the quarter correctly, as i'm not at all worried about this drug's growth going forward. the second issue is more recent. at the end of last week alexion got an fda warning letter from its rhode island manufacturing facility that makes solaris. now, alexion has plenty of solaris supply and over the next solaris supply and over the next
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couple weeks they'll start making changes in the production process that makes the problem go away. sounds expensive. 33% growth rate. that's actually a bargain. how about one that we've had the ceo on, i really like? it's called biomarin. smaller orphan drug with a $7.7 billion market capitalization and no profits to speak of. but i think biomarin has a very promising future. the company specializes in developing enzyme replacement therapies for rare genetic diseases. remember, these are orphan drugs. and these treatments typically cost patients or their health insurance providers somewhere over $300,000 a year. right now biomarin has two drugs on the market for a metabolic disorder known as mps, mary paul sam, that can cause horrific progressive damage at the cellular level if left untreated. biomarin's partnered with sanofi on the drugs aldurazyme. this owns all the rights to the second mps drug, naglazyme which could do $300 million in sales in by 2015.
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and biomarin has the treatment for -- i'm going to mispronounce it. phenylketonuria. another genetic disorder which can cause several developmental problems as well as neurological issues. this drug will only do $100 million in sales by -- remember, this is a giant pastiche. you have all these drugs that come together for some very big sales. now, biomarin is a bountiful pipeline. and just today, just today the company submitted vimazin to the fda which is a treatment for another metabolic disorder. if this orphan drug gets approved, might do $4 million in annual sales by 2018. plus last week biomarin told us they'd be starting phase 3 trials of their drug for pomp disease by the end of the year. and the company has new more effective phenylketonuria drug that's entering phase 3 next quarter. this company as you know when we had the ceo on has more irons in the fire than almost any orphan drug we follow. biomarin less than two points off its highs. the company has so many shots on goal. the move is far from over. here's the bottom line. the future of pharma is in these
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ultra rare orphan diseases that require, unfortunately, very expensive drugs to treat. and the best of the orphan drug names are alexion for a bargain at these levels after this pullback and biomarin for a stock that gives you multiple ways to win. admittedly, not billion-dollar drugs, but altogether certainly possibility for billions. let's go to mark in wisconsin, please. mark. >> caller: yeah, jim. my question is about immunogen. and recently they got approval from the fda for one of their drugs, and the process to deliver that drug. my question is about what do they have in the pipeline and what are their prospects for europe and asia? and thanks for everything you do for us little people, jim. >> we had, as you'll recall, we had mr. junius on, dan junius. and there's a bunch of things immunogen's got going for it. they don't have all the rights
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for this first drug. we were liking it at $11.50 for this tdm-1, but it does have a less than optimal royalty agreement. that's what really got us down. but it does have some other things going on. and those were -- the reason why i'm not just spouting their names, if you remember, they were all -- immunogen and then a number. but they were for ovarian cancer and for lymphoma. and i thought they sounded very promising. let's go to don in pennsylvania, please. don. >> caller: boo-yah, dr. cramer, from beautiful bucks county. >> holy cow. i was there this weekend, man. it looked better than ever. >> caller: it's fabulous. it's fabulous. dr. cramer, my ticker is achn. i know they have a lot in pipeline, and i'm just wondering whether it's a good time to add to my position or hold tight. >> well, we are big believers in trying to solve the problem of hep c, of hepatitis c, and that
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is why we have been such strong believers in the stock of gilead. i'd rather see you in that. the orphan drug companies are in a sweet spot and our two favorites right now are alexion because of that remarkable pullback off the facility that it had in britain just doing the number and not beating the number. and then biomarin, where we had the ceo on and i think they've got so much in the pipe that you've got to own, one or the other. they're both speculative. after the break i'll try to make you some more money. >> coming up, first of four? the first quarter's over, and it's been the best one for investors since 1998. cramer's looking through wall street's best and worst to find which stocks may be able to keep up their winning ways.
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the first quarter's in the books. i say so what? hey, listen, all we care about on this show is where stocks are going, not where they're coming from. i can't make money off the past. we often hear that as goes the first quarter, so goes the rest of the year. which would suggest that this year will be pretty darn fabulous. again, i don't care. i want to know which stocks are going to lead us. so let's look at the top ten performers in the s&p 500 for the first quarter. in this cohort i see plenty of repeat coming. i think these stocks remain fertile ground for more price appreciation. get your pencil and paper out.
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we're going over the winners, and i've got some surprises here. first up, we've got netflix as the leader in the s&p 500 for quarter number one. that's up more than 100%. despite its run, i think the stock has a strong chance of repeating its excellent performance. netflix has several, not all obvious trends going for it but i'm going to detail them because i know a lot of people love this stock. those trends are very much, i think, in their infancy. first, after seeing netflix as a rival, even as an enemy, the major producers of content have decided to endorse it as a friend. the company's been an endless source of payments for majors in exchange for programming. beyond that as independent networks which are doing incredibly well produce more series like the walking dead, down-ton abbey, louis, "mad men," or original netflix productions like "house of cards," the only real way to crack into them is by subscribing to netflix.
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got to know where to win. it's way cheaper than buying all those dvds for people at home. let's take the case of "walking dead." five million people a week now watch that show, but frankly, it is impenetrable unless you start at the beginning. i mean, why aren't they going to the cdc? why aren't they going to fort bragg? well, you've got to start at the beginning, for heaven's sake! anyway, you binge it. you binge view via netflix. and that assures you that you're up to speed. the second reason why this heavily shorted stock can continue its ascent, netflix, just like discovery communications, directv, and all the cable companies, it's a housing play! as more homes are built, cable, dish, and netflix get hooked up. it's a natural tailwind. don't forget, when you buy that new tv, it's got the netflix clicker at the bottom of it. finally, i still believe that netflix remains a takeover target, most particularly for apple, which needs mobile content offering as well as something proprietary to run on apple tv. that stock goes down $13, they ought to be thinking how do we reverse that? netflix.
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meanwhile, this one. microsoft, which is still trying desperately to be cool. this guy's dancing on a table. we want cool product, not good taste in tuna. anyway, this could become cool once it bid $13 billion for this $10 billion company. don't rule it out. why should this monster stay independent with its 27 million subscribers and steve ballmer desperate to leave a legacy? especially since those numbers are growing so quickly after it appeared the company flubbed the client relationship. can anyone even remember what they did wrong? yeah, that's long since passed. netflix is a natural to keep powering higher. i genuinely believe this is a much loved brand that can go higher. the next three standout performers in the s&p 500, best buy, hewlett-packard, and h&r block. i'm saying these all three could run out of gas. hey, look, best buy was left for dead coming into the year and suffered mightily at the hands
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of amazon. however, new management has come in, underperforming stores are being trimmed, and the company is showing a serious revival. that's it. i think the vast majority of the rally comes from a simple theme. best buy's not going under. the cash flow and the balance sheet are stronger than people think, certainly stronger than when its erstwhile competitor circuit city succumbed to the dark force that was amazon. i want you to call best buy the last man standing. hewlett-packard's very similar to best buy. after the debacle that was the autonomy acquisition the endless cash stream coming from its war with dell, so many cheaper versions of the personal computer as well as the declining consulting business and not so hot margins in the printer business, the company's been able to streamline, meaning fire a lot of people, and get the balance sheet back in shape courtesy of the short-handed work of ceo meg whitman. but hewlett-packard like best buy seems more of a bounceback candidate and not a growth
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story, as it did fall 44% last year, that's the worst in the dow jones averages. in other words, the stock was left for dead. turned out to be alive. but you know, you can't get that far from intensive care without some real earnings momentum, you can't cut your way into revenue growth. i don't see any. when i examined the run of h & r block, i came up snake eyes, just didn't see any reason why this stock should be up more than the 3508% it was up for this quarter. let alone reason to think about why it went up at all. i think it's a sell. okay. which brings you to one of the most intriguing leaders in the first quarter. i reviewed this for the last two years and couldn't find a reason to recommend it. no more. i now see it. it's called micron. symbol moo. this semiconductor stock has been a victim of the company's focus on also ran technology. notably the d-ram. dynamic random access memory. where there's been a tremendous competition and for years and years and years incredible pricing pressure! but amazingly there's been a sudden shakeout of players in this game.
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♪ hallelujah two years ago there were seven companies trying to take share from each other in this low-end memory chip business. now there are only three, and micron's becoming in the second biggest behind samsung courtesy of acquisition of elpida. which is an amalgam of manufacturers mitsubishi -- ever declining average selling prices. they call them a.s.p.s. the result, a 38% jump in d-ram revenues which led to an overall increase in revenues and a legitimate upside surprise from a company that had been a serial downside surpriser! i think micron's not done. in fact, i think micron goes higher. maybe much higher. it's the best spec of the whole group. m.u. focus. celgene's been a favorite of ours for some time. profiled it last week.
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despite its 47% increase in the first quarter this stock can continue to run on the strength of new drug approvals coming up in the fall and a multiple of the out years or 2015, 2016. do you know that celgene actually has a lower multiple in next year's numbers than the slow and steady bristol-myers, which is an stock? and i like it a lot. there's no question celgene should be trading at a premium and not a discount. people like the yields so much they're blinded by the bristol-myers light. tenet health is intriguing. saw a lot of the hmos exploit it after the bell because it looked like the government gave them a little medicare managed play. the affordable care act is going to be heavily favoring hospitals, though. and i expect as we get closer to 2014 this stock's going to keep moving higher since it's still nowhere near where it traded at the earlier part of the last decade. tenet's not a favorite of mine but the hospital and hospital-related stocks do continue to soar. two of the remaining stocks in the top ten, marathon petroleum and avon products might have a tough time repeating their performance but neither's expensive. marathon's problems might be a
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reduction in its source of cheap crude as rail and pipelines alleviate the glut of petroleum in the midwest and finally you're taking the crude to where it's needed, where the producers can make a bigger profit, namely the gulf coast. it's not bad, though. avon's a comeback story. it too had gone down far too much after that disaster experience that was the reign of former ceo andrew young. new management's come in but there's only so much you can do in the first couple quarters. that said i think that she's going to solve the numerous investigations. i think they're going to finish above the price they currently finished the quarter. i'm not down on avon. i just think it needs a little time. by the way, don't forget, who was the chairman of avon? fred hassan. who brings good things every time he goes somewhere? fred hassan. former ceo of schering-plough. finally, in what may be the best for last or at least the one that has the potential to be as strong as micron, i want you to consider the stock of a blue
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chip that finished in the top. that's safeway. you've probably shopped there. there are multiple catalysts here. i've always thought this division would potentially be worth as much as the entire company especially when the company was faltering. yes. safeway hopes to sell off $200 million worth of its highly profitable fast growing black hawk business. the offering led by goldman sachs. safeway's been an incredibly shareholder friendly stock. they bought back 57 million shares in 2012 alone. that's 20% of the market capitalization. meanwhile the company's been meeting the challenge of whole foods with its own line of organics and even after the stock's 45% run last year for just 11 times earnings. i'm calling that a bargain. here's the bottom line. the first quarter brought some big wins for the s&p. and i think that netflix, micron, celgene, and safeway have a lot further to run with micron and safeway being the two
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best bets to continue powering higher in 2013. it is not too late for them. and given micron's d-ram consolidation and safeway's blackhawk spinoff, it just might be early. don't move. the lightning round's coming up next. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.
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it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. go to today and make your business dream a reality. at we put the law on your side.
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it is time. it is time for the "lightning round" on cramer's "mad money" play to this sound and then "lightning round's" over. are you ready, skee-daddy? time for the "lightning round" on cramer's "mad money." start with tim in minnesota. tim? >> caller: boo-yah, skee-daddy. minnesota, land of 10,000 frozen lakes. what's your thoughts on priceline? >> priceline is an inexpensive stock. we like the acquisition. let's go to joe in connecticut. joe. >> caller: ba-ba-ba-boo-yah, jim. >> nice stuttering boo-yah. >> caller: happy eight years to you. the stock i want to ask you about is progenics. they've been doing good the last few weeks. >> it's a $5 stock. it's been screaming. it is a nice spec stock. i'm not going to go against it. eric in michigan.
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eric. >> caller: dr. cramer. big boo-yah to you from grand valley state university. >> excellent. >> caller: my question's about alaska airlines, alk. >> i like the airlines, they're all pulling back. but the one i want to be in is us airways because of the merger with amr. let's go to matt in texas, please. matt. >> caller: easter bunny boo-yah to you, jimbo. >> terrific. >> caller: i want to know about hanger. hgr. >> i like hanger. it used to be hanger orthopedics. it's got a great business in prosthetics. i think the stock can go higher. jim in florida. >> caller: boo-yah for you, mr. cramer. >> okay. >> caller: i rung it out at the register a couple months ago. i see it was upgraded today. with the expansion of paypal and growth in foreign markets like india should i get back on the bus? >> i think the stock's got to cool down. multiple upgrades today. let it come down to 53, 54, and then pull the trigger. and that, ladies and gentlemen,
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is the conclusion of the is the conclusion of the "lightning round"! ♪
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you know i've been a big fan of the pipeline operators as a way to play the north american oil and gas renaissance. but last week the industry had a rude awakening when an exxonmobil pipeline ruptured near little rock, arkansas on friday night, causing what the epa describes as a major oil spill. that's two days after a train carrying oil derailed in minnesota and spilled 30,000 gallons of crude. so far the pipeline stocks haven't been hurt by any negative pin action here, which is pretty amazing given the coverage of that. but it did make me wonder, are the pipeline stocks riskier than we thought? what happens if a pure play pipeline operator has an oil spill and you own it? that could put your money in a dangerous situation. so i started asking myself, would it be smarter to invest your money in a company that pipes something a little less toxic, like water? that's when you i realized we need to pick a company with the longest crude oil pipeline
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system on the continent enbridge against the country's largest publicly traded water utility, american water works, in order to see which one is a better buy. these are two very different businesses but they both run on pipes, on transporting liquids from one place to another. however, if the pipes burst at american waterworks you just get wet. worst case, some sewage comes out. but while sewage might stink it's 100% natural, unless you've been eating a very bizarre diet. and it's a heck of a lot easier to clean up than an oil spill. so which is the superior stock, enbridge or american water works? we just spoke with the ceo the other day. there is no easy answer. it's another of those cases where you need to ask not which is the better stock but which is the better stock for you? are you a slow and steady conservative investor who doesn't like risk? in that case you should avoid enbridge and the very real risk of oil spills. in july 2010 the company spilled more than 20,000 barrels of crude into a tributary in the kalamazoo river in michigan. nearly three years later enbridge is still doing epa-mandated cleanup. for risk-averse investors the
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right choice is american water works. we just had the ceo of this water utility on last week and it's clear the company has a lot going for it. american water works has slower growth than enbridge with a 7.9% long-term growth rate. even smaller dividend, 2.4% but it's a lower risk play and it's expanding rapidly for a utility. american water works is benefitting from a number of different trends here. cash strapped towns and cities are increasingly privatizing their water and waste at water utility systems in order to raise money. the vast majority of these are still government owned 84% for water and 98% for waste water, which gives american water works a lot of room to expand via tuck-in acquisitions. 89% of the revenues come from regulated utility business. company's also trying to move into ancillary water businesses like pumping water for shale drilling. if you're looking for lower risk stick with american water works. however, if you're a little more aggressive, if you're the kind of person who doesn't blanch when they see an oil spill like we had this weekend, then enbridge is the stock to own. this company is the lowest cost
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transporter of oil in north america. it controls slightly more than half of all canadian crude imports to the united states. put another way, about 15% of all u.s. oil imports flow through enbridge's pipes. and the truth is enbridge has a much stronger growth trajectory than american water works. 12.6% long-term growth rate while awk is growing at just a 7.9% clip. enbridge has fabulous visibility, meaning it's easy to see how much money they're going to earn many years into the future. building pipelines takes time, even when the government doesn't get in the way. right now we have all this newfound oil and gas but it's in hard to reach places, much of it trapped in the middle of the country, some of it far west of canada. and we need a tremendous amount of new pipe to get this oil to the coast where most of our refinery capacity is. for the moment companies are using trains, trucks, even barges to move their oil, but these methods are all more expensive than pipelines and these companies will switch once new pipelines have been built. given the tremendous demand for pipelines, i'm not surprised that enbridge says it sees, this is a huge number, $35 billion worth of investment opportunities from last year through 2016 and the company
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already has 27 billion of commercially secured growth projects. you know what they will do? these projects will allow the company to consistently grow its earnings and therefore raising its dividend payout. >> buy buy buy! >> it now has a 2.7% yield. that's higher than american water works and the company is a serial dividend raiser over the last decade enbridge has increased its payout at an annual growth rate of 12% per year. the reason why the yield's so low is because the stock keeps moving up. if we're going to view enbridge as a utility just like american water works then maybe it makes sense to do an apples to apples comparison on valuation. awk sells for 17.3 times next year's earnings with a 7.9% long-term growth rate while enbridge sells for 22.3 times next year's numbers with a 12.6% growth rate. that means american waterworks is trading at nearly 2.2 times growth. that's a sky-high valuation. i never like to pay more than twice the growth rate. enbridge is at 1.77. that is not cheap but it's not too expensive either. here's the bottom line. if you're a conservative investor who can't abide the
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thought of a potential oil spill causing your pipeline stock to get hammered, then stick with american water works. but for everyone else i think we have to recognize that aside from the spill risk, these pipeline operators are actually pretty secure, consistent companies with terrific growth opportunities, which is why for those of you who aren't super risk averse i say go buy some enbridge. "mad money's" back after the break. >> coming up, comeback kid? not everyone's been a winner on wall street this year. in fact, some have been downright ugly. but could some of these stocks be ready to go from worst to first? don't miss which shares have caught cramer's eye. oh, he's a fighter alright.
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the s&p's 500 first quarter losers are a motley bunch. the collapse of cliffs natural resources takes your breath away with the coup de grace being morgan stanley's devastating iron ore sales could be cut in half by the competition. this dovetails perfectly with the decline of u.s. steel off 18%, collapse in iron is heavily weighted toward the making of steel which has proven to be a nightmare business in 2013. quite a difference from the run-up to the top of the s&p in 2007, 2008, where u.s. steel was a leader. vaulting from 80 to 191 during a period of phenomenal chinese expansion and a decent construction market in the u.s. those are long since past. sure, anything can turn -- and cliffs was upgraded by goldman from a sell to hold at the end of the quarter but that smelled
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more like a victory lap than anything else. other losers in the quarter, apollo, parent of university of phoenix. apollo looked on the surface to be a terrific beat, ended up being widely planned. and of course apple, nonstop tailspin. another 12, 13 today. but the two losers in the top ten that could come back to be winners, the first is akamai. the streaming video company reported a surprising shortfall. that was then met with a colossal amount of insider buying. i don't care if there's a smattering of buying but it did seem as if every exec and board member bought stock with any cash they had. you know what? that's proven to be an important tell six months later. as the work i've done shows there's not a single instance where the decline was repeated after that kind of multiple insider buying. many instances where you received spectacular returns put down akamai. i think that one could work. however, the stock that most intrigues me among the losers is newfield exploration. that declined 16% for the quarter on a horrendous guide-down of the value of its
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properties, one that almost equaled chesapeake and its snake eyes feel. that said if you don't own it the decline has put new feet into the bargain basement territory. remarkable growth in liquids via some of the terrific drilling in the bakken and woodford shale plays. woodfield hired goldman sachs to sell sell some prime acreage in china and malaysia to focus on liquids growth in the u.s. third there's no reason to think one company can't come along and buy the whole thing if goldman can attract a suitor. eagleford and bakken is hard to come by. stat oil and hallicon resources has been willing to pay lately. we know many companies are trying to switch to less natural gas and more liquids. it's the way to go. the good news here is natural gas has begun to move up thanks to a shortage in drilling and colder than usual weather. at least for this time of year. i'm not saying i want petroleum companies to give up the search. i'm saying the run in all natural gas producer southwestern cannot be ignored. put simply, this decline in newfield i'm calling it a huge opportunity.
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the ignominious write-down is now behind them. i say newfield exploration is the biggest bargain among the losers of the first quarter, and one worth taking. stay with cramer. flying is old hat for business travelers. the act of soaring across an ocean in a three-hundred-ton rocket doesn't raise as much as an eyebrow for these veterans of the sky. however, seeing this little beauty over international waters is enough to bring a traveler to tears. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day...
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