Is Chesapeake Energy a Takeover Target?
Web Editor, "Mad Money"
Cramer started Friday’s “Mad Mail” with some homework, returning to recent stock questions from viewers.
Anne in Illinois asked about VirnetX Holding , a Web security play that is suing Apple for patent infringement. Cramer likes the industry, but unfortunately VHC has run too much, up to $18 and change from $6 in early August. So he recommended taking a pass on this stock.
Ken in Florida wanted to know if RealD , which came public this summer, made a good investment. The company makes an attachment for film projectors so that movies can be shown in 3-D, as well as the accompanying glasses. Cramer thinks the potential here could be big, making RLD a buy, though only on a pullback because it’s pricey at these levels. And only for those who believe in the future of 3-D.
One other piece of housekeeping from Cramer: Polypore , recommended on Aug. 25. The stock fell $3 after reporting inline earnings on Wednesday, but he couldn’t find anything wrong with the quarter. He chalked it up to the run PPO enjoyed ahead of the announcement and too-high expectations for the company. But he’s still bullish on Polypore, which makes this pullback a buyable one.
Now for e-mail:
Robert said he’d made good more with Altria and Enterprise Product Partners , and he wanted to know if it was time to ring the register. He found it hard to let go of their sizable dividend yields, though, as both are over 5 percent. Cramer’s advice? Take some profits but let the rest ride, as he’s still bullish on both companies
Pat wanted to know if Chesapeake Energy’s seemingly low stock price relative to the underlying value of the company made it a potential takeover target. Cramer said no. What could happen, though, is that Chesapeake sells some of its assets. And the private value of even just one of these assets could go “for almost the price of the company.” Cramer said he likes both the common and preferred shares here, though the latter a bit more for its yield.
Ken said he was puzzled by Waste Management , which has underperformed even in this strong market. But Cramer said there was “absolutely nothing wrong with the stock,” and he urged patience with WM. He recommended collecting the dividend while investors wait for this stock to move higher over time.
When this story published, Cramer’s charitable trust owned Altria.
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