tv Mad Money CNBC December 5, 2012 11:00pm-12:00am EST
today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger. > 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, and i promise -- "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 to coach you and teach you. so call me at 1-800-743-cnbc. it is so easy to be negative right now!
>> boo! >> incredibly easy. and when the gloom lifts. >> the house of pain. >> it almost feels like a reprieve from some sort of stock market death sentence, as it did today with the dow climbing 83 points. the nasdaq declined .77% largely because of apple, more on that later. now, i am not dismissive of the negativity that i see pretty much everywhere. we've got a couple of real solid reasons to feel totally downbeat. first, i can't believe we're still focusing on this washington thing. for five years we've had to keep one eye on washington, one eye on wall street. i remember whole ten-year stretches i didn't care what was happening down there. at the moment, we can barely focus on anything but washington. the whole u.s. economy, your entire portfolio is hostage to two warring parties, demonstrating a level of
partisanship that's been empirically measured to being the worst since 1860, the origins of the civil war. let's hope it doesn't take out that particular benchmark. we're witnessing a titanic struggle between those who are willing to rise above politics, and compromise to cut spending and increase taxes. yes, that's the actual compromise radical middle position as dave cote from honeywell says, and those who simply refuse to accept tax increases or entitlement cuts. given that the president's saying he campaigned and won on a platform of higher taxes for the wealthy and the republicans say they were elected because they pledged to behind the scenes power broker grover norquist they would never raise taxes, it certainly seems like the impasse cannot be solved and we got to go over the cliff. not only do the hard liners refuse to rise above partisanship in order to avoid a government mandated recession, which is what it's tantamount to doing, but we can't even get
them to promise no vacation without legislation! >> boo! >> they not only seem mean-spirited, petty, reckless, and angry down there in washington, they're also slothful. have you ever been able to say to your boss, walk in, you know, hey, man i know i've got a huge project due, one that could bring down the whole company if i don't finish, but darn it all, hey, see you later, sport, i'm taking a vacation. i'm out of here! not only do i advocate no vacation without legislation, i want to know, a new one for you. a litmus test. i want to know which of these bitter and indolent politicians have tickets in their pockets to fly out of washington next week. i'm not kidding. i think we should ask each politician we interview, have you purchased tickets to leave without getting your job done? what's the date on that ticket? i'm not asking you about the first class stuff. i want a date. so gloom is a perfectly good attitude when it comes to washington.
but is it right? is gloom right when it comes to wall street? you know what? i'm going to put it out there right now, right here, as bad as washington might be. as slothful and reckless and anti-voter as they might be. i mean, when you think about it, aren't you anti-voter if you champion the position that's likely to get the voter fired and cause his life savings to get hammered? isn't that anti-voter? the companies that i talk about most of the time are almost totally opposite. i don't know many ceos who would possibly leave their jobs if the company were in crisis, because, man, oh, man, i'm hitting the road. vaca. let me tell you how i think we're too gloomy about the companies and their managements. i had the privilege to drop by the meeting in manhattan today. i didn't go for the free coffee or the danish because i'm trying to make weight for the big game. whatever that game is. i went to find out what the company had to say. and what did i hear? starbucks needs more stores in america to cut down the lines, high-quality problem, turning around europe, taking india by storm, talking about adding thousands upon thousands of
stores throughout china, even showed you numbers that said unlike yum, kentucky fried chicken, it hasn't seen any deceleration in china. these are my ears like i listen, these are my eyes, i've watched. howard schultz, call me crazy, made major fortunes investing with them, my bad. and then i heard the questions from the audience, i didn't even listen. what were they looking at versus what i was looking at? they were looking at john carter, i was looking at the new bond movie. one after another, they were all downbeat. is the expansion too rapid? is china any good? whether demand for expensive coffee is there. i was waiting for a guy to say, listen, that triple cappuccino stinks. if i were howard, i would tell them to take a hike. they were too negative versus what the company's up to. their pessimism? opportunity. starbucks was actually down. one time -- i have the apple ipad, you know, thing i'm like, wow, it's under 50. i mean, wow. terrific opportunity. ipad, i mentioned it, surprised one didn't come down and hit me
over the head and knock me out. apple. if we're going off the fiscal cliff, we know capital gains tax rates are going higher, right? right? that's obvious. do you really think the republicans have the power to keep those capital gains rates down? apple's become a referendum on the president's power and polling. right now he has the upper hand, then he can really roll them and intends to do so. it's reasonable to take some profits so you can pay the tax man less now rather than more later. it's a wimpy thing, it's logical, makes perfect economic sense. especially if you hold apple. so the stock gets hammered. it makes sense to sell it. but let's be less emotional and even clinical about this one. first, divide apple's share price by ten, now you have a stock that got crushed down to $54. when you do that arithmetic, it isn't all that scary, is it? where does the pessimism fit in? when we have to endure the pin
the tail on the selloff game, what excuses for the selloff, myriad alibis i hear from today's action. apple's losing share to google, it doesn't have the right phones in europe, nokia's making a comeback, the ipad mini isn't selling, the imac is done, there's no special dividend, we've got a stock chart that is the -- >> sell, sell, sell, sell! >> excuse me for a moment while i get nauseated. apple went down today because it's a big dollar amount stock and it makes a ton of economic sense to ring the register before year-end. why do i always say about apple? own it. shocker. how about citigroup? this company's crushed shareholders for many, many years, but this new management team, you've got to hand it to them for taking tough medicine right before the holidays, firing 11,000 people, shutting down underperforming operations around the globe. no, i don't want to work there, and i feel terrible at the layoffs. i've got a ton of friends over at citi, but i would be happy if
i were a shareholder. the stock went up on the news. never easy to change your mind. something we're asking of our politicians, they can't do that. but citigroup's management was willing to take the hard medicine for the shareholders. we hear endless negativity about china and europe, but the chinese market last night, it was a gigantic move signifying what might be the beginning of a new growth phase. have you checked european stocks lately? smoke show. hey, even i can get too gloomy. i've been critical of bank of america for its unfathomable top dollar acquisitions, including the ill-timed merrill lynch purchase and the ridiculous countrywide buy. i've chided these guys as being one gigantic law firm with a bank attached. that's how much their earnings have been dependent upon legal obligations. and that's what cuts them. bank of america led the dow today, broke out above $10. a level hasn't been seen in ages as the unsold homes dwindles, i think it probably goes higher. here's the bottom line, listen to me, go ahead, be gloomy, you
have every right. be critical, and be angry at those who can't rise above the rhetoric in washington to avoid a recession, and don't even have the common decency to give us legislation before taking a vacation. you know what these people remind me of? they remind me khan, of the star trek villain who showed the wrath on us by sticking proverbial ear wigs into our ears. but the ceos of the companies themselves, sorry, in true scotty fashion, they're giving her all she's got, and just like spock, they want you to live long and prosper. bob in florida, bob? >> caller: hey, big boo-yah to you, cramer. >> right back at ya. >> caller: first thing i want to do is thank you quick for all you do to demystify the market for people. >> that's my goal. thank you. >> caller: i'm guessing i'm not the only senior citizen living on social security that depends on a portfolio of dividend stocks as a supplement. i'd like to get your take on the future of the income stream that took me so long to create.
with one stock in particular, windstream. >> i'm worried about windstream. and i read a lot of the analyst reports and they say, listen, you should be worried. when i have everyone telling me to be worried, i'm not someone who whistles past the graveyard. i say ain't worth it. >> sell, sell, sell. >> john in new york, please, john? >> caller: hey, how you doing, jim? i was wondering how you feel about nokia being that they signed on to china mobile. >> everyone's all of a sudden very excited about nokia. it's on a run. i understand a $3 stock can go to $4, in the end -- remember, i encourage speculation that's informed, but in the end, i have no real reason to own nokia, i think it's going to be an afterthought in the big world that is smartphones. joe in florida. a lot of florida callers lately. joe? >> caller: this is joe from port st. lucie, florida. how are you doing? >> well, i'm getting ready for the mets season, new players coming. >> caller: we need it bad. >> all right. >> caller: i have a question for
you, stj, st. jude medical. >> oh, man, they've been crushing that baby, haven't they? >> caller: i can see they said they were going to buy back some stock, 10%. >> yeah, you know what? we're going to take a pass. because unless we have a good fundamental story, we're not going to be encouraged by a buyback. what happens is the story gets worse and we can't just say, oh, well, they've got a buyback. we need fundamentals. that device business i don't really like right now. is it wall street versus washington? there are tons of reasons for doom and gloom. they're taking too long to rise above. but there are still ceos who are out there trying to get you to live long and prosper. "mad money" will be right back. coming up -- secret garten. with fiscal cliff concerns swirling -- >> it's not a game i will play. >> cramer's trying to protect your portfolio from a possible fall. and tonight he's found an under
the radar reit that could provide cover. don't miss his exclusive with weingarten ceo next. and later, love thy neighbor? forget china. there's a skyrocketing industrial boom just south of the border. want to find out how to hop aboard this new growth theme? cramer's got one play that can put you on the right track. plus -- waiting for washington to rise above? get your portfolio prepared for whatever happens. call, tweet, or e-mail and find your way to the latest edition of "am i diversified" 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. or give us a call. miss something?
back on in a declining market. many strong companies, high yields. let me introduce you to weingarten realty investors, a company i've liked since '85. owns shopping centers all over the u.s. 301 income-producing properties and 11 more in various stages of development. they have a bountiful yield, doesn't have a lot of leverage. company recently sold off the portfolio of industrial assets to become a pure play on retail, and 76% of the rent it collects comes from tenants that are effectively internet resistant. they say it in their own papers. meaning they're as immunized against online competition as it gets. things like supermarkets, restaurants, pet stores, personal care service providers. 93.6% occupancy rate up 200 basis points year-over-year. very bullish guidance. let's check in with drew alexander, the president and ceo of weingarten realty investors. how are you? >> pleasure. great to be here.
>> now, we obviously are all very focused on the notion that washington could get us back into a great recession if they're not careful. and one of the reasons why i have real estate investment trusts on all the time, they know their businesses really well, but in other words, safety. and we were speaking, i don't like to ever leave anything in the locker room, about why this group and your stock in particular works in this environment. >> i think supermarket-anchored retail is an excellent risk adjusted. we have great supermarkets, they do over $500 a square foot in sales. they bring people to our shopping centers that our other merchants can take advantage of. it's a very recession-resilient portfolio. people need to buy the basic goods and services that our supermarket sells. we also have ote a lotnt stocks that you're talking about, people like panera, tjx, ross, the pet guys that you mentioned. it's a very recession resilient product. >> you have the most diversity of any of the real estate
investment trusts, isn't anyone that could take you down. >> kroger's the best of our tenants, they're doing great. tjx, ross, safeway, the concentration of our tenants as you said, very diversified, very good names. and one of the things we're also working on is even more focusing our footprint to locations that are going to benefit from the growth because the markets that we're in, texas, california, florida, the sun belt, the west, the good tax climates, the good business climates, places that benefit from immigration, migration, baby boomers, et cetera. >> well, that's important because one of the themes we've been hitting on is there's some things that can trump even what washington's done. meaning that they could set us back, but you've got some stories in here about areas that are just terrific where your development pipeline is and the strong balance sheet obviously. but it looks like you are in the genuine actual growth areas demographically. so that can't be rolled back by washington. >> agreed.
that's where, you know, we have wanted to focus our portfolio into basically about 12 states from washington state through washington, d.c. all those coastal and border states, plus las vegas, which surprisingly is a very good market for us and denver. >> see, i think people are misinterpreting. we had a fellow on from city national in california yesterday, people don't get it, california and nevada, florida are really coming back and that's where the growth is again in this country. >> again, the population densities around our shopping centers are very strong, that's what allows the supermarkets to do well. many parts of las vegas are very depressed. but there's still people out there, they still go to the grocery store, go to the subway sandwich shop, get their hairs cut, and even in some cases with the downturn, they're taking advantage of something like a day spa, quick massage, because they're not doing the vacation. so we have, you know, a lot of experience, we've been a company since 1948, been public since
1985, we've done this, we have great people, great properties, wonderful platform. we know how to lease space. >> you've been getting out. you got out of industrial, which was a pretty good business. and you've dropped a lot of properties. but it showed that each property, the ones that are left are just doing better. this is just over time pruning that you would do? the industrials seemed a little like all at once, though. >> it's several things, it's a focus, we want to focus on those 12 states, larger properties, we want to focus again on the metropolitan areas and the properties that have barriers to entry, but that will also benefit from growth as people move into houston, to dallas, to southern california, to san francisco area, et cetera. we've been in the industrial business for a long time, and we liked it. but it was clear to us that the market wanted a more pure focused company. and it made sense as part of the overall focus. plus, as you mentioned, leverage is very important. and we wanted to lower our leverage. >> right.
>> it made sense to part with the industrial, even though it's good properties, good people there, and focus again on quality, supermarket anchored retail in the major metro areas in 12 growing states. >> one of the things i loved about your presentation and also your conference call is you are not -- you're willing to face head-on the challenge of amazon. you directly -- you're the first real estate investment trust who says, listen, here's the ones that the internet can't get. you recognize the threat is a real one. >> i think it's a real threat. i think we were very conservative in how we came up with our number that we think that some merchants can be affected somewhat on the margin. but, again, the vast majority of what we sell, the prices of it are too cheap for it to be delivered for free forever. >> okay. >> it's a lot more efficient -- it's a lot more efficient to go to the supermarket, mile or so away versus that last mile of delivery. so something that's very expensive that a store makes a
big gross margin on, they could possibly give away the delivery, but most of what our tenants sell, you can't. plus the haircutters, the restaurants, you can't. >> i like your business. >> the bricks and clicks model is -- i was at a convention at the hilton in the city. and there's no question, the bricks and clicks model is what will happen. retailers will provide an internet alternative, they'll let you pick it up in the store, they'll let it be shipped, they'll have other sizes, they'll move it from store to store. and that's the model. all the retailers are talking about the internet is driving their business, gives good research, you know, it's a complement. it'll affect a little bit, but good retail, dense populations, very good risk adjusted. >> going to continue to work. this the the kind of stock you can ride through a fiscal cliff with. thank you to drew alexander, president and ceo of weingarten realty investors, i've followed it for years, it's the best, wri. after the break, i'll try to make you more money. thank you, drew. >> thank you.
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>> europe's in a nasty recession, united states could be on the verge, well, of returning to the great recession because our leaders can't rise above and agree on anything. and china's still struggling to get their act together and beat their own slowdown. although the communists seem to be doing a pretty good job of breathing new life into their economy. look at that market last night. when you take a global view, all right, things stagnant. but there are still some bright spots out there. and believe it or not, one of the brightest is mexico. that's right. mexico has been getting its act together, industrial and automobile production south of the border are on the rise. and they're growing gdp faster than we are in the united states, much faster. just two days ago, we got terrific mexican manufacturing purchaser managers index number which rose to the highest level since june, and the mexican auto business, well, it is on fire. thanks to a phenomenon being
called near sourcing. thanks to rising wages in places like china and rising transportation costs, it now makes sense for auto companies to build their factories in a place like mexico where wages are low and it's easy to ship the cars they build to the u.s. via the rails. >> all aboard! >> yep. mexico's probably the cheapest place on earth to make stuff to send to the united states. and speaking of the rails, the best way to play this theme is with my new favorite railroad stock that i'm unveiling tonight, kansas city southern, ksu. at a time when many rails are struggling, kansas city southern is thriving, stock at $77 and change, just $6 off its highs. why, oh, why do i like this company so much? simple. geography. take a look at this map of the company's rail network, okay? nsas city utherns the new intercontinental railroad. except unlike the one you studied in school, it runs from
north to south instead of east to west. it has 6,600-mile network, it's pretty much evenly divided between the united states and mexico and the network is only one interchange away from every single major market in north america. believe me when i tell you, this area is just booming. i go down there a lot and i cannot believe how strong it is. kansas city southern got into mexico in 1996 when the company won the concession to privatize and run the trunk line of the mexican national railroad. that's the main line linking mexico city with the u.s. border at laredo, texas. they spent the last five years heavily investing in their mexican network. and right now this is proving to be a terrific business to own. lucky? i don't know, lucky and good. like i said before, the mexican economy is now benefitting in a major way from near sourcing as it's becoming increasingly attractive as a place to manufacture things for the u.s. market relative to china. now roughly 60% of mexico's gross domestic product is in
kansas city southern rail corridor, and kansas city southern's mexico business grew auto volumes at an astounding 31% clip in the last quarter. who's got that kind of industrial growth? and the company expects growth to continue in that solid double digit range. what's more, kansas city southern currently serves nine auto plants in mexico, but nissan, honda, mazda and audi will be opening new plants. bmw has. crazy, huh? bmw. over the time frame, mexican auto production is expected to surge from 2.5 million vehicles a year to 3.5 million. i think that's low versus what will ultimately be. and kansas city southern and kansas city southern believes they will have 60% market share. kansas city southern should benefit from the auto rebuild
that's needed in the wake of hurricane sandy. can't get this stuff to america fast enough. united states fast enough. thanks to the strength of the economy, the increasing volumes with declining costs. the gross margins are expanding. how much do we love that in a rail? however, the auto industry only affects about 18% of kansas city southern's revenues. they do have some coal exposure, something that's crushed a great many american railroads, we know that because we have backed away from a lot of rails because of the coal. but they have something the other railroads don't have, consistently high growth, not that low single digit stuff and not susceptible to the cyclical nature of coal or the ongoing war between natural gas and coal in the fight to be fuel for american utilities. and that's why i'm naming it my new favorite railroad. even over and above union pacific, which has always been my favorite. don't get mad at me, union pacific. i used a great union pacific calendar, but it's december. that one's off the wall. anyway -- kansas city southern also saw some exposure to the bakken shale. they found so much oil, they
need to ship it via train in order to get a decent price because there's not enough pipe yet, not enough pipe laid from north dakota to the rest of the country. and the company owns half of the panama canal railway which provides ocean to ocean service along the canal. they have fantastic management. ceo david starling was named railroader of the year for 2012. this stock is taking you for a fabulous ride. i got the idea from brian ashenberg who writes the newsletter for the street.com. he gave us a lot at a really low price, a lot of good ideas. brian first got buying kansas city southern a while ago. the stock's given his news letter 360% return, but the stock's only up 14% in the last 12 months. i think many of the earnings estimates could be way too low. the consensus is for kansas city southern to earn $5.32 in 2013. nobody in the rail business has anywhere near that kind of growth.
credit suisse sees an additional $1.60 earnings per share by 2016, thanks to this traffic. even if you give that figure a 20% haircut, we're still talking about earnings that could be 24% higher than the street's expecting just a couple years down the road. that's a recipe for some major earnings beats and estimate increases, which are the single best predictor of higher stock prices. that stock's likely to go higher. kansas city southern sells for 18.9 times next year's earnings, not cheap, but 60% long-term growth rate. 16% growth rate, not that bad. it may seem expensive versus union pacific. which, remember, i told you i liked. a lower 14% growth rate. but this is a situation where you get what you pay for. with kansas city southern, you're paying a premium for the terrific mexico catalyst that no other guy has plus the big auto exposure and at current levels,
the price, let's say it's right. kansas city southern only has a puny 1% yield at the moment, strong cash flow here, getting even stronger and could raise the dividend. here's the bottom line, there are still countries that are in great shape and mexico despite all that publicity about the gangs and the -- i've got to tell you something, mexico's in better shape than almost every country on earth. best way to play it, kansas city southern. the new intercontinental railroad running north/south across north america, or as they sometimes call themselves, the nafta railroad. at last, maybe we can get some revenge for all of the jobs nafta has cost us. all of the losses. anyway, ksu is my new favorite rail. and i think you can buy it at weakness because it's got the tracks where people want them and little competition to boot. let's go to greg in mississippi, greg? >> yes, mr. cramer, thank you so much for taking my call. >> my pleasure. >> caller: i had the pleasure of speaking to you on the
"lightning round" approximately a month ago about nordic tanker. >> yeah, go ahead, i'm sorry. >> caller: no, no, i'm sorry, at that time you recommended me not go into that particular stock. i was just wondering, you highly recommended it in your book getting back to even which i thoroughly enjoyed, and i was curious if anything changed in particular with the company or that sector in general. >> i had to back away from it. and i think those who know the show and watch it know that i've backed away from it considerably because there was never a conclusion in the number of ships being built. we are so overbuilt when it comes to the ships that nordic american uses that they can't raise rates and i suspect there'll be many more bad quarters. we don't know when it's going to bottom, but i have said stay away and i reiterate. i can't recommend the stock, it's just too dangerous. let's go to raymond in florida. raymond? >> caller: mr. cramer. seasons greetings from palm
harbor. >> love it. wish i were there. it's kind of gloomy here. what's up? >> caller: first-time caller. jim, like you i've been looking for a good secular high-growth company in the water space. and few weeks ago, a friend of mine starts telling me about this company, they're involved in helping to pump out the brooklyn battery tunnel in the aftermath of hurricane sandy. thought it was a local company. the company is xylym. turns out they're a spinoff. i never heard of this company in my life. what do you think of them? >> we liked it -- when i.t.t. was all together, we liked the itt's defense business and we liked this company. but you know what? sir, i've not looked at it either since the spinoff. we owe you to look at that and we will. i've been telling people that clean harbors is the way to
play. i'm looking at xylem. they pick these things, hey, whatever, they've got the naming guys, i would have called it itt cleanup. anyway, we're going to look at it for you. don't let economic worries jade you. mexico's economy is thriving, it just doesn't get talked about. i think kansas city southern is the way to benefit. >> all aboard! >> it's the nafta railroad except for it doesn't take away our jobs. don't move, "lightning round's" coming. keep up with cramer all day long. follow @jimcramer on twitter and tweet your questions #madtweets.
bp has paid over twenty-threebp billion dollarsnt to the gulf. to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger.
it is time -- it is time for the "lightning round" on cramer's "mad money." rapid fire calls, i tell you whether to buy or sell. play until this sound, and then the "lightning round" is over. are you ready skee-daddy? it's time for the "lightning round" on cramer's "mad money." starting with lidia in california. lidia. >> caller: hi, jim. oh, my gosh, i love your show. love it, love it, love it. >> thank you.
>> caller: michael kors. >> there are three michael kors, that incredible ad, boy, see that ad, attractive, attractive. there's michael kors fundamentals and everybody has to profit. when everybody has to profit, people are going ca-ching. doug in new jersey. >> jim, how are you doing? >> all right. how about you? >> caller: good, i want to get your take on morgan stanley. >> i've got enough problems. i'm probably too negative. i'm not negative on morgan stanley. it's fine, it's at $16, but i like wells fargo more because wells fargo is levered to the housing market and has done absolutely nothing like morgan stanley and i think has more upside. >> buy, buy, buy! >> plus, warren buffett's approval, which in my world still matters. robert in massachusetts, robert? >> caller: hi, jim, looking at i.t. >> don't look, start buying, man. >> buy, buy, buy! >> that is a really terrific stock.
go buy some small and buy more on the way down. jack in oklahoma, jack? >> caller: boo-yah from oklahoma. yahoo, it's got some legal things and i'm curious if i should take profits or hold it. >> i think yahoo has got a ceo for the first time in ages that makes me feel that this thing is on the comeback. i really like yahoo. i would use whatever momentary weakness they have to get in the stock -- >> buy, buy, buy! >> which still hasn't lost its mojo and people use every single day. don in california. >> hey, jim, happy holiday boo-yah to you. >> same to you. how can i help? >> caller: hey, my stock is aep, american electric power. >> well, i know american electric power is one of those stocks that only i would possibly put on tv because nobody really cares. you know what i like? what i like about that stock, 4.35% yield. >> buy, buy, buy! >> limited downside. i say buy. let's go to john in georgia. john?
>> caller: jimbo, i'm so glad to speak to you. here in kings bay, georgia, st. marys. >> julio jones and i get along very well this season. so what's up? >> caller: i need tractor supply company. >> all right. i said the other day, i'm a little backing off a little from tractor supply, it's one of weakest of the stocks. but down here, got knocked down really badly yesterday. i think down here it's okay. let's be aware, retail, shaky ground because of my friend, buddy pal, fiscal cliff. let's go to chris in connecticut, please, chris? >> caller: boo-yah. i want to know where you stand on cabot oil and gas. >> i don't know, where i stand, it's already too high. this thing does not come in. i would prefer you to be in eqt, which i think i reiterated this morning and i think is much better. there are lots of people who say there will be blockbuster natural gas deals coming down the road and that's why cabot
stays high, that plus it has incredible marcellus holdings. when i first heard about marcellus, it was through cog and i thought it was like veal, but it turned out to be a good place for natural gas. that is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. coming up -- waiting for washington to rise above? get your portfolio prepared for whatever happens. call, tweet, or e-mail and find your way to the latest edition of "am i diversified." t's why sh the leader in mobile trading. so she's always ready to take action, no matter how wily... or weird... or wonderfully the market's behaving... which isn't rocket science. it's just common sense. from td ameritrade.
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you call, you tweet me @jimcramer. you tell me your top five holdings and i'll tell you if your portfolio is diversified enough or if you need to mix it up a little. let's start with a tweet. tonight from @tomes521, who writes, clean energy fuel, cisco, groupon, broadcom and -- santander. wow, am i diversified. you can be diversified but also be really -- have some really bad stocks, and, oh, doctor. anyway. all right. groupon, i got the mani pedi coupon this morning, i wanted to leave "squawk on the street" because they offered me three in one day for half value. but i don't know what it is, so i stayed and did the job. santander, spanish bank, broadcom, my charitable trust
owns it. cisco, these two are too much alike, get rid of cisco. clean energy fuels, total speculation, groupon, you know, maybe it's time to swap into zynga. all right. that was a stock joke. bank, i don't even know what this is. bank, speculative energy play, real technology company. man, you know what you need here, you need like bristol-myers or something like that. and certainly like let's put an industrial in there, how about honeywell? dave cote's doing a great job. that would spruce up this portfolio. do we have like -- are we r-rated? do we have like -- i think we're probably okay. i don't want the hollywood sensors to crack down on me. let's go to dave in wisconsin. dave? >> hey, big wisconsin boo-yah to ya. home of the harley davidson. >> yeah. >> caller: gis, general mills, proctor and gamble, pg, kellogg's, k, ibm, ibm,
jpmorgan, jpm. am i diversified? >> i do have a harley in my garage. it's a great-looking machine and i'm proud of having it. kellogg's, i think that is -- battle creek, michigan, terrific food company, jpmorgan, good bank, general mills, well, wait a second, we've got two of a kind. that's a match game one. i'll come back to that. procter, my charitable trust bought today. ibm, also charitable trust. we're going to keep kellogg, we're going to -- oh, boy, penpal's going to get mad at me, but we can't have both of these. we're going to swap out the general mills put in bristol-myers and own jpmorgan, a bank stock and then we will have diversification. ♪ hallelujah >> that makes me feel at home. let's go to scott in west virginia. scott? >> caller: hey, jim.
i've got kellogg, k, norfolk southern, nfc, disney, dis, abbott laboratories, abt, bank of america, bac. >> mountaineers, wasn't their year, like that team, though. okay. here we go. disney, bob iger is doing a remarkable job. did anyone else like it besides me after that quarter? i stuck by it. bank of america, financial, abbott drug company, norfolk southern transportation, kellogg food, it's a food, transport, drug, entertainment, bank, bingo, perfect! i wouldn't change a thing. "mad money" back after the break.
not one, but two astounding deals today, two astoundingly bad deals. freeport mcmoran and plains exploration. a judgment that the market confirmed with the tremendous $6.12 or 16% hammering of the acquirer freeport stock. i talked positively about ceos at the top of the show tonight, but i couldn't resist going over this outrage. first, the president and ceo of the faltering mcmoran exploration also happens to be
the chairman of freeport, the acquirer. yeah, he's using freeport money and stock to buy his other business, mcmoran, drilling a gigantic well in the gulf of mexico, called the davey jones which has been absolutely disastrous. >> the house of pain. >> so far, for the company, mmr has been crushed by this 29,000-foot deep well, which may turn out to be a total bust. but if you own mmr today, you just got $14 in cash and 1.1 units of royalty trust giving you a massive $7.36 or 87% move in a stock that had been free falling of late courtesy of the missteps in the davey jones project. the other portion, the plains exploration partners gave you $8.35 gain. that's better.
they bagged quality gulf properties from the macondo ravaged bp on the cheap. still, though, this one also raises some eyebrows. plains owns 35% of mcmoran exploration. plains ceo on the board of mcmoran. these hardly qualify as arms length deals. and while i've been recommending plains exploration, i would never have thought it was such a hot idea for any company let alone a related one to buy mcmoran exploration, which plummeted $4 from $12 recently when we got that negative report from the davey jones well. i simply can't imagine this deal happening if the same guy wasn't the chairman of both the acquirer and the target. doesn't smell right to me. i like deals where even the stock of the acquirer goes up, not down. and the positive acquirer actually had been the hallmark, oh, not this time. yes, the $50 a share in cash that freeport's paying to plains is causing major arbitrage pressures on the freeport stock, but i think this is just one gigantic -- let's see how -- you've got to be careful.
how about ripoff -- no, let's just say they paid way too much. plus, there's another reason for the wholesale dumping. the instant recoloration of the stock shareholders thought they owned. freeport was supposed to be the world's premiere copper company, it was yesterday. and one of the best ways to invest in china was yesterday because so much of the company's copper ends up there. now it's going to be an oil and copper company where i worry something's wrong with the copper side of the equation. freeport's largest overseas copper holding is in indonesia. they had trouble there. plus, recently the orders become harder to pull out of the ground, less expensive, is the writing on the wall that freeport might face expropriation some day? is this the beginning of the end of the company's best asset? and these acquisitions show the fallacy of playing the mining stocks instead of the ore. those who like copper, reach for freeport endlessly.
best way to invest in copper is jjc, my initials and also the etf. they like their substantial gold holdings, go with the gld. yes, you have every reason to be upset if you own fcx. to me it seems that freeport got the short end of the stick and big shareholders other than the company's chairman can't be blamed for dumping the stock right into the selloff. and by all means, please, ring the register tomorrow, no later, tomorrow on plains and mcmoran exploration. stay with cramer.
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