Monday may have been an awful day for the market as a whole but it was extremely profitable in the oil industry. Three important deals caused oil to boom – Kinder Morgan (KMP) bought El Paso (EP) , Statoil (STO) bought Brigham Exploration Company (BEXP) and Energy Transfer Partners (ETP) selling off its $2.9 billion propane business.
Here are Jim Cramer’s stock picks on Monday night:
Kinder Morgan Energy Partners (KMP): Cramer is recommending KMP as a buy. The way he sees it, the El Paso deal will boost KMP’s long term growth rate from around 5% to 7%, give or take. The deal with El Paso will also develop KMP into the largest pipeline company. KMP closed yesterday at $75.14, near its 52-week high of $78.
Statoil (STO): Cramer recommended Brigham as far back as February 25 and his opinion has not changed. He is still bullish on Bakken producers. Granted, they have come down in price because the cost of oil has gone down, but Statoil paid enough for Brigham to demonstrate just how bullish the market is on the crude that comes out of the Bakken. STO ended trading Monday at $24.27. It is trading at 6.49 times its earnings and generating an EPS of 3.86.
Energy Transfer Partners (ETP): So, ETP is selling its propane business to Amergas for $2.9 billion. To Cramer, that means that ETP will be shedding dead weight and freeing up resources to focus on its natural gas products. Cramer is calling ETP a buy, even after Monday’s rally. It closed Monday at $43.64 a share.
MarkWest Energy Partners LP (MWE): Cramer is recommending MWE for its similarity to EP. It processes natural gas from Marcellus Shale and KMP bought EPS for the Marcellus. Also, Cramer recommended buying MWE before at $45.25, and it closed yesterday at $46.21. Cramer calls it a “pin action play off of Kinder Morgan and El Paso.”
Continental Resources, Inc (CLR): Cramer sees CLR as being similar to Brigham – it is an oil-focused producer with lots of exposure to Bakken. It didn’t perform well on Monday but Cramer thinks a foreign buyer could see the value and buy it. CLR closed trading Monday at $56.86, down a little on the day but up from a 52-week low of $45.43 on October 3.
EOG Resources Inc (EOG): It is the same story with EOG as with CLR. EOG is an easy target with great resources. EOG closed Monday at $81.41 a share, down from a high of $119.07. In the last year, the $21.87 billion market cap company has lost 19.12%.
WalMart (WMT): Cramer had backed away from WMT, but now he thinks the company may be turning itself around. While the stock has been a little depressed lately, Cramer thinks it is poised to over perform the market in the long run. The stock is cheap enough right now to gain on the upside. It is trading at 10 times its earnings, it has a 2.65% yield and it is trading at less than $55… and it is almost the holiday season. WMT has been turbulent but it has produced a 4.64% return over the last 12 months and it has been steadily trending upwards in share price since hitting a 52-week low of $48.41 on August 10.
Sina Corp (SINA): Cramer is completely off SINA. He went for it for a little while, then it went cold. For his money, he prefers Baidu. SINA closed yesterday at $88.42 a share, down 5% on the day.
Baidu (BIDU): Cramer likes BIDU. He says it “looks the most like US accounting.” BIDU closed trading Monday at $135.61 a share. Ken Fisher’s Fisher Asset Management fund has more than $590 million in BIDU (see Ken Fisher’s top picks).
VirnetX Holding Corp (VHC): Cramer does not like this company, but he is a fan of one of its competitors – QualComm. This company had a short rally from April to August, reaching a high of $39.88 in July. It is now trading at $15.30 a share, near its 52-week low of $11.53.
QualComm Inc (QCOM): Cramer likes QCOM for all the patents it holds. QCOM closed trading Monday at $53.64 a share, putting its 52 week return to 22.46%. QCOM is popular with Lee Ainslie’s Maverick Capital. It holds a $422 million position in the company (check out Lee Ainslie’s favorite stocks).
Teledyne Technologies (TDY): Cramer says that TDY is a great company. Even though it is trading near its 52-week high, Cramer recommends it as a buy. TDY closed trading Monday at $52.62, near its 52-week high of $54.68.
Windstream Corp (WIN): Cramer likes this company as well. He sees a good growth strategy and a strong run. He says buy WIN. The stock closed yesterday at $11.90, bringing its 52-week return to 3.54%.
Frontier Communications (FTR): Cramer is also bullish on WIN rival FTR. While he likes WIN better, Cramer is still calling FTR a buy. This company has been falling steadily since reaching a high of $9.09 a share in January. FTR closed trading Monday at $5.95, near its 52-week low of $5.63.
CenturyLink Inc (CTL): It is the same case with CTL – Cramer likes WIN better but he is still saying CTL is a buy. CTL is trading at $34.33 a share, near its 52-week low of $31.18. Phill Gross and Robert Atchinson’s Adage Capital Management is a fan. It has a $11.5 million position.
Campbell Soup Co (CPB): Cramer thinks that CPB will recover to its 52 week high and, even if not, it is still a buy because with a 3.5% yield investors are protected from a lot of downside. CPB hit a low of $29.51 a share on August 10, but it has been recovering steadily since. It is currently trading at $33.09 a share, nearing its 52-week high of $35.42.
American International Group (AIG): Cramer is definitely bearish on AIG. Last night, he said, “AIG’s got real bad holders who I think are going to have to sell by year end… sell, sell, sell.” AIG has lost steadily since hitting a high of $51.25 on January 7. It is closed yesterday at $22.24 a share.
The GEO Group Inc (GEO): Cramer thinks GEO is a good stock and said that he would buy the stock. GEO is trading at $18.07 a share. Clint Carlson has $48.2 million of his Carlson Capital invested in GEO (check out Clint Carlson’s top picks).