Mad Money: Bald Is Beautiful on Wall Street: Part 1 - Mad Cap Recap

FEATURED SLIDESHOW

  Who Is The Worst CEO?
Mad Money needed new inductees for its
Wall of Shame, so we asked viewers for
  nominations.

RECENT POSTS

Get stock and market information from Mad Money's Jim Cramer sent to your mobile phone.

Road Rules

Investing can be confusing. Luckily, Cramer has mapped out some road rules for all you Home Gamers trying to navigate the jungle that is Wall Street. Think of it as "Mad Money 101" –- some fundamental advice to keep in mind as you play the market. Whether you're a first time investor or a seasoned financier, it's always good to remember the basics.

Watch the Videos

Text Size

Feb.04

6:58 PM ET

Monday, 4 Feb 2008

Bald Is Beautiful on Wall Street: Part 1

Posted By:Tom Brennan

Topics:Earnings | Stock Picks | Stock Market

Sectors:Oil and Gas

Companies:Apache Corp | Exxon Mobil Corp

Bald is beautiful on Wall Street, Cramer said.

But he's not talking about Sy Sperling bald. The Mad Money host was referring to company earnings that look good superficially, but can't be sustained. In genuine Wall Street gibberish, a quarter like that is said to "have hair on it."

Exxon Mobile's [XOM Loading... () ] last report is a perfect example. The oil giant announced a $2.16 a share profit, 21 cents above the $1.95 estimate, and then the stock dropped. Why? A closer look showed that one-time gains boosted the company's numbers by over $1 billion. Take that away, and Exxon beat by only 5 cents -- and some of that EPS growth came from coporate finance and stock buybacks, which is not was investors want from an oil company.

But that's not the only reason Wall Street's coughing up fur balls. Exxon only grew production volume 1% year-over-year. Not to mention, Exxon spends more on buybacks than it does replacing its reserves, Cramer said, and for an oil company, reserves are "everything." Now he's thinking a February analyst meeting is going to show just how little Exxon put into finding new oil.

CLICK FOR THE REST OF MONDAY'S SHOW:

So forget about Exxon and its hairy earnings. Go bald with Apache [APA Loading... () ] instead, Cramer said. APA has 9% to 12% production growth and great reserve replacement.

"I just see no reason to own the Exxons of the world."

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?

Tools:

Print Email

Previous Post Back to Main Page

ADD COMMENTS