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Your Updated Airlines Trades
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Web Editor, Mad Money
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Airlines were the big discussion during Thursday’s Stop Trading!, whether it was about an Icelandic volcano forcing flight cancellations or Continental’s new deal discussions with UAL.
The volcano, erupting from beneath the Eyjafjallajokull glacier, has sent ash flying as high as seven miles into the atmosphere, Reuters reported, forcing Britain to cancel flights in and out of the country until Friday morning. Cramer said this could “wreak havoc on the earnings” of US airlines like Continental [CAL
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], United [UAUA
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] and American [AMR
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], all of whom collect significant revenues from transatlantic flights.
“It’s worth thinking [about] whether the numbers are too high” now, he said.
Also, responding to news that Continental had reentered mergers talks with United, Cramer said it might be time to take profits on these stocks, which have had a “tremendous run.” He emphasized, though, that “there have been very few instances where they’ve had sustainable tremendous runs.” Therefore, investors might want to cash out until the share prices drop and any potential deals have panned out.
“They’ve always been trading vehicles,” Cramer said of the airlines. “They’ve never been investment vehicles.”
Also, Cramer called Ken Heebner’s endorsement of Ford Motor [F
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] “brilliant.” Heebner had said during Street Signs that he expects “big positive news in pickup trucks coming,” and that’s a “huge business” for Ford. He went so far as to say that pickups would be “arguably the biggest profit center going forward in this company.”
Cramer’s been bullish on Ford for some time now, and he predicted we’d see “massive ratings agency upgrades” after the company’s next earnings report. Right now Ford Motor Credit paper still suffers from poor credit ratings, but Cramer expects that to change soon.
“It used to be the best rated paper,” he said, “and it’s going to be again.”
Regarding the Apache [APA
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]-Mariner Energy [ME
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] deal, Cramer said the former was trying to look more like Anadarko [APC
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]. In this environment of low natural gas prices and lack of support for the commodity in Washington, a number of nat-gas companies, it seems – EOG Resources [EOG
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], included – are trying to get more exposure to oil. But he still thinks APC is “still a better play.”
And lastly, MGM Mirage [MGM
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] pre-announced disappointing first-quarter numbers, partly because of gambling weakness in Las Vegas. But Cramer said the business there was a zero-sum game. If MGM is losing customers, then someone else must be gaining.
So, “Buy Wynn [WYNN
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] on any MGM weakness,” he said.
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