GO
Loading...

Pipeline Profits

Cramer recommended Spectra Energy as his latest play on this "year of natural gas," as he calls it.

Spectra doesn’t drill, it transmits. It has the infrastructure companies like Apache , Anadarko and Chesapeake need to get their product to market. Spectra, spun off from Duke Energy , has 18,000 miles of pipeline, running from the south central U.S. to the Northeast and up to British Columbia.

It’s not the price of natural gas that matters here. Spectra makes its money on the volume of natural-gas throughput. And since 2008 is such a big year, that translates into nice profits for the company, especially with more and more production coming online.

Spectra has a stock buyback worth 3.3% of market cap and a good 3.5% dividend yield. Cramer said he expects that payout to increase yearly going forward. The company should see single-digit growth consistently, too, he said.

The stock’s trading at a discount relative to its peers. If Spectra got a similar price-to-earnings multiple, the share price would go to $32.84, a nice 17% gain.

If the stock doesn’t go up right away, though, at least that dividend is paying you to wait.





Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book