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15 мая 2015, 14:06

General Motors Has Good Yield But No Momentum - Cramer's Mad Money (5/13/15)


Summary

  • CEOs need to take action.
  • Can Watson do it for IBM?
  • It's time for clean energy.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, May 13.

Cramer wants companies and CEOs to take action. Every major stock move on Wednesday was due to bold decisions made by CEOs. They did not let Fed rates, weak retail sales, Germany bund yields or Greek politics get in their way. "Almost every single company with a stock that jumped today played a major role in that jump, and very few of those rallies were earnings based," said Cramer.

These people understood that only by taking action can they create value for shareholders. One instance was Pall Corp. (NYSE:PLL) which was acquired by Danaher (NYSE:DHR) for $127.20 per share, while Pall was trading at $99 on Monday. The brilliant move came after the acquisition when Danaher decided to split the company into two entities. One, an industrial company with a specialty in test and measurement, and the second, a science and technology company with Pall under its umbrella. Both companies will be manageable units and avoid the complexity of being under one roof.

Another instance was Williams Companies' (NYSE:WMB) acquisition of Williams Partners LP (NYSE:WPZ). This will make Williams Companies an engine for income and growth, where it can raise capital cheaply to make other pipelines acquisitions and increase dividends.

Then it was Owens Illinois (NYSE:OI) buying Vitro’s food and beverage glass container business for $2.15B to expand in Mexico. It sent the stock higher.

Delta Airlines (NYSE:DAL) was another winner that decided to take action instead of swinging with the oil price. They announced a $5B buyback and dividend boost.

On the flip-side was DuPont (NYSE:DD) which went down due to Nelson Peltz's fund Trian failing to represent itself on the DuPont board of directors. While Peltz made a long-term commitment to DuPont, short-term investors dumped the stock to less than $70. "The problem with DuPont's stock is that with Peltz unable to effect change, it becomes just another chemical stock, subject to the slings and the arrows of the world's economies," said Cramer.

He believes world economies are getting better and CEOs should not wait but take action. "To the CEOs who are watching, let me tell you something: it's no sin to think big when trying to create value, not by standing there, but by doing something. So what are you waiting for?"

Can super-computer Watson do it for IBM (NYSE:IBM)?

Cramer interviewed IBM CFO Martin Schroeter on Tuesday, where he saw a demo of the super-computer Watson. Cramer was impressed with what he saw, but people are not that enthusiastic. "I don't think anyone believes the presentation of Watson's prowess we saw on last night's show can or will impact IBM's bottom line in a major way. It's only a small part of a very large company," said Cramer.

Cramer believes that IBM is backing Watson, as its core business is declining, and it is working to counteract that decline with a cloud-based product that can read huge amounts of data. Watson holds 12M journal articles and it can provide diagnoses and save lives. It can also interpret data and make logical decisions which are unbiased.

Watson will help companies predict trends and make a difference to their bottom-line. This in turn will help IBM in the long run. "So, it's not a gimmick for IBM. It's a door opener that allows you to brainstorm, or perhaps save lives, and improve the customer's bottom line when it comes to cutting out wasteful polling and test marketing," said Cramer.

CEO interview - Cisco (NASDAQ:CSCO)

It's the end of an era in tech as CEO John Chambers of Cisco, who has been there for 20 years, announced his retirement and takes the role of executive chairman till the transition of new CEO Chuck Robbins is complete. Chambers has made the company grow into a giant which is at the epicenter of the Internet of Things. He has made the company survive through good and bad times and innovated. Cramer interviewed CEO John Chambers to find out what the new role and a new CEO means to Cisco.

"Our company is in the most competitive position ever. We have moved from selling boxes to outcomes. You're digitizing every country and every company. You either change and disrupt, or you get left behind," said Chambers. He reiterated the company's guidance of record EPS. He added that the new projects in the pipeline are going strong.

"There will always be a new group of challengers. You and I have seen them come and go over the years, and they have mainly come and gone more rapidly," said Chambers. He added that Chuck Robbins is the best person for the new role and to take Cisco to a new level.

Time for clean energy

With the oil price all over the place, the collapse and then the rebound, Cramer decided to consult and interview T. Boone Pickens, the infamous oil magnate, financier and philanthropist, as well as the founder and chairman of BP Capital Management. He made a bold call in December that oil will find its way back to $100 within the next 12-18 months.

"I think you are going to see $70. I said on the 23rd of December we would see $70 by the end of '15. We are going to be there and I think you could be back up to $90 to $100 by the end of 2016," said Pickens. What dropped the oil price was the demand, which was projected at 1.45M barrels a day, but instead it was only 660,000 barrels a day. "They don't believe you can recover as quick as you can. But you're going to recover because if you cut off 1,000 drilling rigs out of 1,600, man you have made a big cut," he added.

Pickens expressed disappointment with energy policy in Washington. "Where is the energy department? Where do they call the shots? They don't have a plan in Washington," he said.

Pickens was confident that most companies will switch to clean energy fuels. UPS has not bought a diesel truck in 2 years. Wal-Mart (NYSE:WMT) and Fed-Ex (NYSE:FDX) are talking about changing to clean energy too. "I am saying that they are going to switch to natural gas. I think they're all going to go to it, because it's cheaper and it's cleaner," he added.

CEO interview - Entergy Corp (NYSE:ETR)

With rising interest rates, the stocks of high yield utilities get slammed. But Entergy Crop announced yesterday, a major solar project that will make New Orleans the first city in America to both generate and store solar power. Could this take the stock higher? Cramer interviewed CEO Leo Denault to discuss the project.

"The situation that we have got, because of all of the growth that we are seeing in the Gulf South, manufacturing businesses under construction as we speak all up and down the Mississippi river corridor, we've got a lot of growth in the utility business which supports the dividend," said Denault. He added that this new opportunity will support the growth in dividends which will compete with rising bond rates.

Viewer calls taken by Cramer

General Motors (NYSE:GM): "I don't want you in there. While it has a great yield, the stock has no momentum."

Union Pacific (NYSE:UNP): "The stock is going down but it is a good company." However, Cramer is not recommending it.

Intercontinental Exchange (NYSE:ICE): Cramer recommends buying the stock.

Juno Therapeutics (NASDAQ:JUNO): "We like Juno because we like cancer therapy. These are specs and they can be wild."

Gartner (NYSE:IT): "It is very well run. I like your call."

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Source: http://seekingalpha.com/article/3182196-general-motors-has-good-yield-but-no-momentum-cramers-mad-money-5-13-15?source=feed_articles_sectors_technology