December 17, 2010
06:28 EDT MIPS theflyonthewall.com: MIPS Technologies initiated with a Buy at ThinkEquity
Target $18. :theflyonthewall.com
December 9, 2010
05:21 EDT MIPS theflyonthewall.com: Jim Cramer's "Mad Money"
Jim Cramer said, "You need to stay in the game." He once again preached the lesson of diversification to those investors chasing only the hottest stocks in the market. Investors that own stocks in the red hot gold, minerals, manufacturing or agriculture sectors got clobbered today, as the markets appeared to be rotating out of these groups and taking their profits elsewhere. He said a diversified portfolio needs to include growth stocks, gold stocks and dividend stocks. One hated sector, the banks, picked up the slack. Stocks like PNC Financial (PNC), Wells Fargo (WFC), Bank of America (BAC) and JPMorgan Chase (JPM), were all higher Wednesday as the promise of dividends and stock buybacks gets larger. Also on the upside Wednesday, were the consumer stocks-- Procter & Gamble (PG), Clorox (CLX) and Kimberly Clark (KMB) were all up on the day. Cramer said he's not sure how long this sector rotation will last, but until it does investors cannot own the growth stocks without also being diversified in other sectors as well. "The bond apocalypse is upon us," Cramer told viewers. With bond prices beginning to free fall, the loss of principal will become more than the interest gained. He advocated better alternatives such as high-yielding dividend stocks. Cramer's new diversified dividend portfolio to replace bonds consisted of five stocks, each in different sectors. For energy, he likes Linn Energy (LINE) with its 7.1% yield, but for this portfolio Kinder Morgan Energy Partners (KMP), with its 6.3% yield wins the prize. For Telco, Winstream (WIN) and Frontier Communications (FTR) were runners up, but Verizon (VZ) wins with its 5.9% yield and four year dividend boost track record. In Uilities, ConEd (ED) came in second to UIL Holdings (UIL) with a 5.8% yield. REITs: Healthcare REIT (HCN) and EastGroup Properties (EGP) were in the running, with EastGroup the winner with a 5.1% yield and a record of 123 consecutive dividend raises. Finally, Consumer: Altria (MO), with its 6.2% yield. EXECUTIVE DECISION: Cramer sat down with Greg Lucier, chairman and CEO of Life Technologies (LIFE), who showed off his company's new personal genome machine, a product that can read a large chunk of the human genome in just hours. Lucier said that the market for this equipment is in the tens of billions of dollars. Lucier said that 40% of company sales now come from overseas, with China in particular representing $200M a year in revenue. In U.S., his company has benefited from increased government spending in the past and is pivoting into the food safety area to diversify. Cramer called Life Technologies a winner, and recommended the stock. CLOSING COMMENTS: Cramer said the estimate boost from Home Depot (HD) is bigger than people realize. Cramer said this shows the housing market is beginning to rebound. LIGHTNING ROUND: (Bullish) MIPS; GLD; JPM; WFC; BAC. (Bearish) LMT. Reference Link :theflyonthewall.com
December 1, 2010 Jim Cramer's "Mad Money" "Continuing his "Stock-ing Stuffers" series on the best retail stocks, Cramer turned to the apparel vendors, a group that offers a higher return on their invested capital since they only make products and don't have retail stores. He focused on companies with strong brands and international exposure like: Nike (NKE) and Polo Ralph Lauren (RL). With Nike trading at just 17x earnings with a 10.5% growth rate, Cramer said he would pay up to 20x earnings for the stock. Ralph Lauren trades at just 18x earnings with a 13.5% growth rate. Cramer said he also likes Philips-Van Heusen (PVH), a diversified player, and Guess (GES), which gets 60% of sales from overseas. "
After The Wall Street Journal disclosed rumors that iGate (IGTE) would bid, along with a private equity firm, for a controlling stake in Patni (PTI), Roth Capital estimates that such a deal could be accretive to iGATE's EPS. The firm thinks such a deal would increase iGate's customer base.
He has mentioned it once on TV. Once on the lightning round late last week...and last night for the first time. It's not him. it's Paulsen. NG's Recources etc. the public is not privvy to his Action Alerts, or this blog! Wake up! :)
SWN Crmaer bought more
Closing One Position and Adding to Four Others
"Finally, I bought new energy position yesterday in Southwestern Energy, because I think the dramatic lag in natural gas is about to change because of improved industrial usage. The oil/natural-gas ratio spread usually trades in a range from 6 to 1 to 9 to 1, and it now trades at 22 to 1. While there are many reasons why the spread should be wider than normal (notably there is more nat-gas availability) it seems extreme to me. Southwestern is the pure play on natural gas and is the industry leader in terms of production growth, high returns and low costs. It could also be considered a takeout play -- one analyst made commentary to that effect today. I own it for its strong fundamentals and excellent operating skills."
Wait and See and Buy Gold
By Jim Cramer
11/12/2010 1:48 PM EST
Click here for more stories by Jim Cramer
"For me, I think Dow 11,000 will be hard to go through and will hold. I also, right now, like gold here. I think that the crash in gold is a terrific opportunity to get in, especially if you consider gold through a $14 stock that's off 40 cents, the only way to really get comfortable with the precious metal."
might be early on this trade, but Southwestern is a gem of company in the natural gas industry, and it's rare to be able to buy this high-quality natural gas pure play at the current valuation. Southwestern is one of the largest and fastest-growing exploration and production companies with 100% of its exposure tied to natural gas. It has a very low cost structure (all-in costs in 3Q averaged $1.25/mcf and F&D costs were $1/mcf), and thus it can drill profitably at the current natural gas spot at $4/mcf. The company also has high reserve replacement rates (the amount of proved reserves added to a company's reserve base during the year relative to the amount of oil and gas produced) and has an excellent history of operational execution.
Because the upstream (exploration and production) business is very capital-intensive, without a major recovery in the underlying commodity, it's important to find companies that have high incremental returns on capital -- and Southwestern boasts the highest in the industry (its minimum rate of return on investments is 30%). Its primary area of exploration and development is the Fayetteville Shale (Arkansas), where 80% of its production comes from, but it also has exposure to the other large shale plays in Marcellus (Pennsylvania) and Haynesville (East Texas) fields. Southwestern expects to grow production over the next several years despite the lower commodity price and has been adding almost 100 Bcf of reserves per year over the last few years.
In its most recent quarter, production grew 43% y/y and 7% q/q, with 88% from Fayetteville. Full-year 2010 production guidance is 33% y/y, much higher than the group average of 10%-15%. Costs have been Southwestern's major advantage, because its large yet concentrated portfolio allows it to achieve economies of scale at lower costs -- a huge advantage over its peers. But the real cost savings come from its rigs, specially designed for each field, and the fact that it takes control of all aspects in exploration (controlling gas deliveries, having state-of-the-art gas gathering facilities and access to interstate pipelines). This kind of evidence was seen in the most recent quarter, where completion costs fell 12% q/q -- much better than its peers. Although the debt levels are above its peers at 30% of capital, the balance sheet is strong and the company has low borrowing costs.
I will start off with a small position and recognize that patience is required. But when natural gas moves higher, SWN is a great way to play it -- this is one of the highest- quality companies in the sector. It trades at a premium to the group -- well deserved based on its superior growth advantage -- yet it has lagged its peers so far to date. My target is $50.
Initiating a Nat Gas Position
11/11/10 - 02:56 PM EST
I am going to add to the energy part of the portfolio this afternoon, adding 500 shares of Southwestern Energy (SWN:NYSE) around $38.00 after you receive this Alert.
Natural gas has lagged the market and the overall commodity food chain over the past year due to oversupply conditions and weak demand. But in the last month, prices have stabilized, and I expect they will gradually recover from the very depressed levels throughout 2011 as the economy improves, industrial demand returns and we head into a more favorable seasonal environment that should help reduce the bloated inventories.
It's clear that our economy is improving (despite the weak job market), led by the industrial/manufacturing sectors. Dozens of industrial companies have indicated a pickup in demand and see the recovery continuing well into 2011; this outlook is supported by the strong monthly ISM, PMI and factory order figures over the last year. Industrial companies are big users of natural gas, and I think that's why prices have firmed recently. That, and the fact that natural gas has drastically underperformed oil -- the spread between the two commodities is close to a 20-year high (the oil/gas price ratio, historically steady around 6- to-1, today stands at 22-to-1). The stocks that have heavy exposure to natural gas have lagged those companies with stronger exposure to oil, where the supply/demand fundamentals have been better. That's why, until now, I have chosen to own a very oil-based group on energy stocks - - Hess (HES:NYSE), Marathon (MRO:NYSE) and Weatherford (WFT:NYSE); Fluor (FLR:NYSE) is more of a special situation with a variety of commodity exposure. And while I like oil for the long term (I have a $100 target), the real value is in the natural gas group.
P art 2 coming
MGM is going up. If you missed LVS...this is the next turn around
Between them and Cramer the shorts must be scared. If they are not they are arrogant!
11/09/10 - 11:46 AM EST
After you have received this Alert, I am going to buy 1,200 shares of NovaGold (NG:NYSE) at $14.33
NovaGold is a Canadian-based precious-metals company with three world-class assets in Alaska and British Columbia. It has a 50% stake in the Donlin Creek gold project in Alaska that it partners with Tech Resources (Canadians largest mining company) and a 50% stake in the Galore Creek in British Columbia that is a joint venture with Barrick Gold (the world's largest gold company). It also reacquired 100% interest in the Ambler copper/zinc/gold project in Alaska. In total, NovaGold's net interest in these projects in is 30 million ounces of gold, 157 million ounces of silver and 9.1 billion pounds of copper, but the potential is far greater as commodity prices move higher and the company begins production (expected in 2015-2016).
The story is exciting on its own merits, given the huge potential and quality of reserves in its projects (Donlin and Galore Creek are two of the largest gold/copper mines in North America), the limited political risk and NovaGold's exploration expertise. Its balance sheet has dramatically improved after getting financing from two of the most respected investors in the sector -- Paulson & Company and Soros (priced back in the spring at $5.50/share) -- which brought in $175 million, which will enable the company to continue to build out these assets.
2011 will bring a few catalysts that should move the stock higher, independent of higher gold prices -- feasibility studies, permitting and construction completion of its Galore Creek project as well as potential sponsorship and analyst coverage. Interestingly, back in 2006, Barrick Gold made a $1.53 billion hostile bid for the company ($16 a share, which was rejected by shareholders) when gold was half the price it is today. Considering the ore grade and quality of the minerals in its mines, the stock is worth far more, in my view. I wouldn't rule out another takeover bid from either of its partners or from a foreign buyer such as one from China, as companies around the world look to bulk up natural resources, particularly gold deposits.