The House of Medicis - Cramer's Mad Money, (6/20/08)

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday June 20.

Gardner Denver (GDI)

Cramer recommended Gardner Denver, a manufacturer of components to produce and ship oil as yet another way to make money on the ever-rising commodity. Oil's jump on Friday did not affect the stock, and Cramer sees this value gap as a golden opportunity. "Gardner doesn't just make things, it makes things smaller, better and more energy efficient," said Cramer. The company is rated first or second in all of its businesses, and has estimates and a multiple which, according to Cramer are too low. Gardner Denver is trading at 13 times a $4 forward estimate, which is 50 cents lower than it should be and lower than its competitors. Cramer expects GDI to reach the same level as its peers in the mid-60s by the end of the year, which would mean a 20% bounce.

Speculation Friday: Oil Sands Quest (BQI)

Would anyone buy an oil company without revenues on one or two catalysts which might or might not pan out? While this kind of speculation isn't for the faint-hearted, Cramer sees the sense in buying Oil Sands Quest, which owns 500,000 acres in the Saskatchewan oil sands. Oil sands produce "dirty oil" which is harder to refine. Although the company has no revenues yet, its real estate holdings alone could give it an offer which may bring up the stock 156%. Even a more modest offer may move the stock price from $6.24 to $8.34. Cramer emphasized once again that this $6 stock is high-risk, so he would do research, buy incrementally and use limit orders.

Game Plan: CVS Caremark (CVS), Walgreen (WAG), Rite-Aid (RAD), Darden (DRI), Nike (NKE), Research in Motion (RIMM), ConAgra (CAG), Discover Financial (DFS), Lennar (LEN), Micron (MU), Accenture (ACN)

Cramer expects the summer season on Wall Street to get off to a slow start unless oil makes a dramatic move. He doesn't think Walgreen will give a good report, but would buy CVS Caremark because Rite-Aid's report later in the week will be even worse, and Cramer believes CVS and Walgreen could become a duopoly in the pharmacy space. Cramer doesn't think Darden will do as badly as many expect, and if there is a decline, he would buy before it reports on Tuesday. Looking to the Olympics, Cramer would buy Nike on weakness if it falls following its report on Wednesday. If it doesn't drop, he'd give it a miss. Cramer thinks Accenture on Thursday will be “ terrific in a day otherwise shrouded in gloom," as he expects bad news from ConAgra, Rite-Aid, Discover Financial, Micron and Lennar.

CEO Interview: Jonah Shacknai, Medicis Pharmaceutical (MRX)

Shacknai discussed Medicis' new acquisition of LipoSonix Technology, which breaks up fat under the skin using ultrasound technology. This procedure saves consumers the trouble and scars of liposuction, and Shacknai claims patients can lose a few inches. However, analysts are not thrilled with the acquisition and doubt the technology will make it past the FDA. Shacknai blames the negative environment and says LipoSonix is doing well in Europe. Cramer was neutral on Medicis, but said the criticism was "small-minded" and recommended doing one's own research.

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Comments

[PhillyD]

Oilsands Quest. The amount of land has constantly been misquoted from Cramer on down. They do not have 500,000 acres leased but over 700,000. Then if you take Cramer's real estate play terms the stock should be (if they paid the same per $2.8 mil per acre as Ivanhoe recently paid) $24.00 per share and not $16.00. Then if you only value half of that (why only half?) the stock would be worth $12.00 not $8.00.

But real estate aside they have found oil on each test drill. Their Axle Lake Discovery is in hand. The amount will be independently announce sometime in July/August.

There is a very real possibility that they are sitting on way more than 10 billion barrells of oil equivlant. They will be exploring those 700,000 acres for more than any of our lifetimes. They are bringing in the equipment as we speak to begin and the town where this is happening has already voted "YES" to have them come in and do their thing.

Speculative? Yep. But where else are we going to find a potential $100-200 value, in the most sought after commodity on earth, for a mere $6-7 per share?

See what happened when OGX went public last week? 6 billion in market cap in one day and all they have is water rights. BQI has already found oil and is currently market capped at 1.4 billion. I like my chances.

[MJ2346]

Regarding PhillyD's comment about OGX. Is that the correct symbol? I've had a long term interest in PICO and water rights. Thank you.

[User 103985]

Good response, PhillyD. You might also note that just recently an independent audit (McDaniels) showed good probability of reserves being TRIPLE what BQI originally (and conservatively) reported.