The market has put gold and the gold stocks in the Sell Block but Cramer is ready to bust them out.
Gold is undergoing a classic bull market pullback, Cramer said, leaving investors with a nice opportunity to buy into a commodity that’s poised to go even higher over the long run. His favorite gold stock, Yamana , is somewhat of a different story.
The stock missed the last quarter by a wide margin and lowered overall production expectations for the coming quarter, even as it also released preliminary production numbers that beat expectations. But Cramer isn’t ready to give up completely.
Yamana CEO Peter Marrone called into Thursday’s show to put his company’s earnings miss into perspective. The business environment, he said, from higher steel prices to higher fuel prices, has not been kind to gold miners. If you factor in the higher all-around costs, he said Yamana delivered for the first quarter above expectations.
But Cramer wasn’t entirely convinced. The miss was substantial, he said. Could it really have just been because of higher costs? After all, that’s an issue for almost every business on the planet. Still, Marrone pressed on that Yamana had been in a “transitional” phase ever since its $3.5 billion acquisition of Meridian last fall. Cramer wondered if Marrone overpaid for Meridian, but he said it was just the opposite. With commodity prices where they are, it’s far cheaper to buy existing production than buying something in the development said, Marrone said. He also said he doesn’t anticipate any new acquisitions in the company’s future.
The bottom line on Yamana is that Cramer’s still not entirely sure. He’s a big believer of gold here, so he might buy a little AUY, but he would leave the aggressive buying until after the company reports its next quarters’ earnings.
Jim's charitable trust owns Yamana.
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